EU to increase tariffs on Chinese EVs to protect its car industry: Report

The European Commission has given the final green light to steep tariffs on electric vehicles (EVs) made in China, officially closing the probe that began one year ago, as per Euro News.

According to Euro News, the extra tariffs on China-made electric cars will go ahead as planned, despite ongoing talks with China and will apply as of Wednesday.

They are set to remain in place for the next five years.

Meanwhile, Brussels will continue negotiations with Beijing so as to secure a deal on minimum prices that can replace the tariffs. It was observed by Euro News that this solution which was advocated by Germany is highly complex and would be difficult to implement.

Despite the introduction of tariffs, Brussels claims it remains committed to finding a solution with Beijing through enforcement of customs duties and rules which are compatible with the World Trade Organization (WTO), although this remains elusive.

"By adopting these proportionate and targeted measures after a rigorous investigation, we're standing up for fair market practices and for the European industrial base," said Valdis Dombrovskis, the Commission's executive vice president in charge of trade.

As per Euro News, the entry into force was widely expected after the inconclusive vote earlier this month where member states failed to mount the necessary majority in favour or against the measures.

The Commission invoked its trade powers to break the impasse and approve the duties, which come on top of the existing 10% rate and vary according to brands.

For instance, for Tesla, it is 7.8 per cent, BYD, 17 per cent; Geely, 18.8 per cent; SAIC at 35.3 per cent; other EV producers in China who cooperated in the investigation but have not been individually sampled, 20.7 per cent, and other EV producers in China who did not cooperate, 35.3 per cent.

Euro News reported that the executive argues that additional tariffs are necessary to offset the effects of the subsidies it claims Beijing is injecting on a large scale across its domestic EV sector.

The financial aid provided to the Chinese producers has resulted in them selling their products at lower prices than compared with those of their European competitors, the Commission attested.

Because of this it was observed that the Chinese firms' EV sales in Europe have increased at extraordinary pace with their market share jumping from 1.9 per cent in 2020 to 14.1 per cent in the second quarter of 2024, according to the Commission's estimations.

It was observed that if strict measures are not taken, EU's carmakers would suffer unsustainable losses and be pushed out of the lucrative market of net-zero mobility, leading to the closure of plants and the dismissal of thousands of workers, Euro News reported.

"There's a clear and imminent threat to our car industry not making the transition to electric vehicles and being therefore wiped out," a senior EU official said on Tuesday, speaking on condition of anonymity.

As per Euro News, China denounced the Commission's probe from the outset as a "naked protectionist act" consistently denying the existence of subsidies, describing the findings "artificially constructed and exaggerated," and threatening retaliatory measures against the EU's dairy, brandy and pork industries, setting alarm bells ringing in some capitals.

"We disagreed on each and every fact that we established in the investigation," the senior EU official said. "It was a broad disagreement."

In recent times when the US and Canada have put 100 per cent tariffs on Chinese EVs, Europe continues to remain one of the wealthy markets available for Beijing's high-end products.