FRANKFURT, Germany (news agencies) — The European Union is imposing sharply higher customs duties on electric vehicles imported from China. EVs are the latest flash point in a broader trade dispute over Chinese government subsidies and Beijing’s burgeoning exports of green technology to the 27-nation bloc.
The higher duties go into effect on Friday, pending a final decision in four month’s time.
Here are some basic facts about the EU’s planned customs duties:
After an eight-month investigation, the European Commission, the EU’s executive arm, found that companies making electric cars in China benefit from massive government help that means they can undercut rivals in the EU on prices, take a big market share and threaten European jobs.
It announced the higher duties on June 12 and they go into effect from Friday. The duties are provisional, meaning they will be totaled up but won’t need to be paid until they’re confirmed by a vote of EU governments before Nov. 2. The EU will only collect the duties if there’s a further finding that the European auto industry would have suffered material harm without them.
That gives the EU and the Chinese government time to negotiate. Talks have been held between Valdis Dombrovskis, the EU commissioner for the economy, and Chinese Trade Minister Wang Wentao, as well as at the level of technical experts.
The higher duties are not a goal in themselves but “a means to correct an imbalance,” commission spokesman Eric Mamer said Thursday. “We certainly hope we can come to a solution which would allow us not to have to move forward on this path.”
The rates, if applied, would be: 17.4% on cars from BYD, 19.9% on those from Geely and 37.6% for vehicles exported by China’s state-owned SAIC. Geely has brands including Polestar and Sweden’s Volvo, while SAIC owns Britain’s MG, one of Europe’s bestselling EV brands. Other EV manufacturers in China including Western companies such as Volkswagen, BMW and Tesla would be subject to duties of at least 20.8%. The commission mentioned that Tesla might get an “individually calculated” rate if duties are definitively imposed.
Under EU rules it’s possible — though at present it seems unlikely — that the higher duties could be blocked ahead of the Nov. 2 effective date by vote of what the EU calls a “qualified majority” of countries. That means at least 15 of the 27 EU member governments representing at least 65% of the bloc’s population.
Chinese-built electric cars jumped from 3.9% of the EV market in 2020 to 25% by September 2023, the commission said, in part by unfairly undercutting EU industry prices.
The commission says companies in China accomplished that with the help of subsidies all along the chain of production, from cheap land for factories from local governments to below-market supplies of lithium and batteries from state-owned enterprises to tax breaks and below-interest financing from state-controlled banks.
The rapid growth in market share has sparked fears that Chinese cars will eventually threaten the EU’s ability to produce its own green technology needed to combat climate change, as well as the jobs of 2.5 million workers at risk in the auto industry and 10.3 million more people whose jobs depend indirectly on EV production.
Subsidized solar panels from China have wiped out European producers — an experience that European governments don’t want to see repeated with their auto industry.
Unusually, the commission acted on its own, without a complaint from the European auto industry. Industry leaders and Germany, home to BMW, Volkswagen and Mercedes-Benz, have been skeptics about the subsidy investigation. That’s because many of the cars that will be hit with tariffs are made by European companies, and because China could retaliate against the auto industry or in other areas.
The Biden administration is raising tariffs on Chinese EVs to 100% from the current 25%. At that level, the U.S. tariffs block virtually all Chinese EV imports.
That’s not what Europe is trying to do.
EU officials want affordable electric cars from abroad to achieve their goals of cutting greenhouse gas emissions by 55% by 2030 — but without the subsidies EU leaders see as unfair competition
The planned tariffs are aimed at leveling the playing field by approximating the size of the excess or unfair subsidies available to Chinese carmakers.
European countries subsidize electric cars, too. The question in trade disputes is whether subsidies are fair and available to all carmakers or distort the market in favor of one side.
Chinese carmakers have learned to make electric vehicles cheaply amid ferocious price competition at home in the world’s largest car market.
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