European Commission imposes China EV tariffs citing ‘unfair’ subsidies

LONDON (ICIS)–The European Commission is to move forward with proposed plans to impose tariffs of nearly 40% in some cases to China-manufactured battery electric vehicles (BEVs), citing a level of state subsidy it terms as “unfair”.

Following an investigation launched in October 2023, the Commission determined that the level of support provided for electric vehicle production in China was substantial enough to pose a “threat of economic injury” to EU producers.

Discussions between Commission and China government representatives have “intensified” in recent weeks, and discussions continue around reaching a solution compatible with World Trade Organization (WTO) rules, the EU executive body added.

Those talks have resulted in a slight reduction in overall tariffs being levied on some of China’s largest electric vehicle manufacturers compared to the rates set out in a 12 June pre-disclosure.

Manufacturer BYD will face fresh tariffs of 17.4%, Geely 19.9% compared to earlier plans for 20%, and SAIC 37.6% compared to earlier plans for 38.1%.

Other China BEV producers that co-operated with the investigation are subject to weighted duties of 20.8%, while the duties for non-co-operating companies will be set at 37.6%.

The duties apply from 5 July for a minimum of four months, with a decision to be taken on whether to implement the levies long-term. If a final decision is taken to impose definitive duties, the tariffs will remain in place for five years, the Commission added.

“Based on the investigation, the Commission has concluded that the BEV value chain in China benefits from unfair subsidisation, which is causing a threat of economic injury to EU BEV producers,” the European Commission said in a statement.

“The investigation has also examined the likely consequences and impact of these measures on importers, users and consumers of BEVs in the EU.”

The French government has backed the move to investigate the impact of China subsidies on European BEV markets, while German Chancellor Olaf Scholz has warned against the move.

Germany is one of Europe’s key auto manufacturers, with large global players in the sector such as BMW and Audi deriving a substantial portion of their international business from China.

The German Association of the Automotive Industry (VDA) on Wednesday issued fresh public criticism for the plans, claiming that the tariffs will slow the growth of the electromobility sector and slow carbon reduction target progress.

“The anti-subsidy tariffs would make electric vehicles more expensive on the European market or prevent them from being offered on the market at all,” the trade group said.

Thumbnail photo: A dealership operated in Moscow, Russia, by Geely, one of the producers facing intensified sanctions. Source: Maxim Shipenkov/EPA-EFE/Shutterstock