10:44 am, June 12, 2024
Chinese EVs have found themselves at the centre of a major diplomatic row amid reports that the EU is set to introduce additional 25% tariffs on them.
The Financial Times is reporting that the European Commission will today tell the likes of BYD, Xpeng and Omoda that their cars will be subject to additional duties when they are imported to bloc countries.
The decision is said to have been made despite warnings from the German government, which is apparently fearful of a ‘costly trade war with Beijing’.
Sources close to the deal say the move has been largely pushed by the French and Spanish authorities in order to raise billions for the EU’s annual budget.
In response, China is threatening ‘retaliation’ with the country’s foreign ministry spokesperson, Lin Jian, describing the move as a ‘typical example of protectionism’.
He said: ‘Protectionism has no future. Open cooperation is the right path.’
The FT reports that the additional 25% tariffs would be implemented on top of existing 10% charges. The move would also impact on Tesla, which has car building facilities in China.
The government in Beijing currently charges a 15% tariffs on the import of European EVs heading the other way.
The likes of Germany, Hungary and Sweden have all spoken out against the decision but EU bosses say the measure is needed in order to combat subsidies handed out by the Chinese government to its carmakers.
In order for the new rule to be overturned, the trio of rebels would need convince 11 other governments to stand with them.
Czech Republic and Slovakia – both of which have major car production plants – are expected to oppose the plans.
A vote on the tariffs will take place before November 2.
How the story has unfolded
Car Dealer first reported that the EU was considering additional tariffs on Chinese EVs back in September.
In her annual state of the union address to EU lawmakers, Ursula von der Leyen, president of the European Commission, said that cut-price Asian brands had kicked off a ‘race to the bottom’ which was ‘distorting’ European markets.
She also committed to a new ‘anti-subsidy investigation’ to help avoid European brand’s being ‘undercut’ by cheaper alternatives.
The FT reports states that since its launch, Germany has put pressure on the EU to drop the investigation but has had no success.
In response to the launch of that investigation, China threatened ‘retaliatory action’.
China’s ministry of commerce said: ‘[This investigation is] a naked protectionist act that will seriously disrupt and distort the global automotive industry and supply chain, including the EU and will have a negative impact on China-EU economic and trade relations.
‘‘China will pay close attention to the EU’s protectionist tendencies and follow-up actions, and firmly safeguard the legitimate rights and interests of Chinese companies.’
Despite being aimed at helping European carmakers, several legacy brands from within the EU are said to be against additional tariffs on Chinese EVs.
Several reports state that bosses are fearful of being cut off from China, which represents one of their biggest markets.
However, Stellantis boss Carlos Tavares has previously said that European brands were facing ‘terrible fight’ amidst an influx of new Chinese firms.
He added that the situation has left Europe’s automotive industry at a crossroads and called for assistance from politicians.
