Agencies
The European Union started imposing higher duties on imports of electric vehicles from China after talks between Brussels and Beijing failed to find an amicable solution to their trade dispute that has divided Europe and prompted retaliation from Beijing.
Electric vehicles have become a major flashpoint in a broader trade standoff over the influence of Chinese government subsidies on European markets and Beijing’s burgeoning exports of green technology to the bloc.
"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,” European Commission Executive Vice-President Valdis Dombrovskis said Tuesday.
"We welcome competition, including in the electric vehicle sector, but it must be underpinned by fairness and a level playing field,” Dombrovskis said.
The duties would stay in force for five years unless an amicable solution is found.
According to the commission, which manages trade disputes on behalf of the 27 EU member countries, sales of Chinese-built electric cars jumped from 3.9% of the EV market in 2020 to 25% by September 2023, in part by unfairly undercutting EU industry prices.
Just over a year after launching its anti-subsidy probe, the European Commission will set out extra tariffs ranging from 7.8% for Tesla, 17% on cars made by BYD, 18.8% on those from Geely, to 35.3% for China’s state-owned SAIC, on top of the EU’s standard 10% car import duty.
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 and BMW, would be subject to duties of 20.7%. The commission has an "individually calculated” rate for Tesla of 7.8%.
Beijing on Wednesday objected to the measures as protectionist and unfair, saying it did not "agree with or accept” the tariffs and has filed a complaint under the World Trade Organization (WTO) dispute settlement mechanism.
"China will continue to take all necessary measures to resolutely safeguard the legitimate rights and interests of Chinese companies,” China’s Commerce Ministry said.The EU’s retaliatory duties have been controversial, having run into opposition in Germany, which has Europe’s biggest economy and is home to major automakers, and Hungary amid fears of provoking China’s ire and setting off a bitter trade war.
The head of Germany’s auto industry association, VDA, said the imposition of the tariffs is "a setback for free global trade and so for prosperity, the preservation of jobs and Europe’s growth.” Hildegard Muller said the move increases the risk of a far-reaching trade conflict.
"The industry is not naive in dealing with China, but the challenges must be resolved in dialogue,” Muller said in a statement.
Germany opposed tariffs in a vote this month in which 10 EU members backed them, five voted against and 12 abstained.
Volkswagen, which has been hit hard by rising competition in China, has previously said the tariffs would not improve the competitiveness of the European automotive industry.
The measures come as thousands of German industrial workers, including at the carmakers, strike for higher wages, with Volkswagen possibly about to announce shutting plants on home soil for the first time in its 87-year history.
Hungarian Prime Minister Viktor Orban said the EU was headed for an "economic cold war” with China.On the other hand, France, which pushed for the investigation, welcomed the decision.
"The European Union is taking a crucial decision to protect and defend our trade interests, at a time when our car industry needs our support more than ever,” French Finance Antoine Armand said in a statement.