EU imposes temporary tariffs on Chinese electric vehicle imports.

July 5 is when the temporary duties will take effect; definitive duties might start in November.


To exacerbate trade tensions with Beijing, the European Union proceeded with plans to slap temporary tariffs on imports of electric vehicles manufactured in China, with the possibility of raising rates to 48%.

On July 4, the European Union (EU) announced in a press release that it would impose temporary tariffs on three Chinese manufacturers that were selected as samples for its anti-subsidy probe.

In addition to the current 10 percent duty, MG manufacturer SAIC Motor will have to pay an additional 19.9 percent and 17.4 percent in tariffs, respectively, as well as BYD and Geely.

Companies that did not comply will be subject to an additional 37.6 percent levy, while other Chinese EV producers who were cooperative with the investigation but were not sampled will pay a weighted average fee of 20.8 percent.

Unless the parties reach a different agreement or a qualified majority of EU member states veto the final decision, the provisional duties will take effect on Friday and become definitive by November.

At that final stage, Tesla might get a duty rate that is specifically calculated for them once they request to be sampled.

The EU, which stated that negotiations with China have heated up recently, said the investigation found that China heavily subsidizes its electric vehicle (EV) sector, hurting the EU automakers’ bottom line.

According to a statement by the European Commission’s executive vice president Valdis Dombrovskis, “We are continuing to engage intensively with China on a mutually acceptable solution.” “Any negotiated conclusion to our investigation must adhere to WTO regulations and fully address EU concerns.”

China has started a focused anti-dumping investigation on pork imports and has promised to respond. The results of an inquiry into EU spirits are expected early in 2019 but, given past events, may be released at any time.

Beijing has issued a warning that it may affect large-engine vehicles, aircraft, and agricultural products in Europe. China may also choose to object to the EU’s investigation at the World Trade Organization.

For the next four months, the EU and China want to carry on their consultations regarding a future course of action.

Any solution, according to Brussels, must be based on WTO regulations and address the damaging subsidies that the investigation has shown.

According to earlier reports from Bloomberg, Beijing has attempted to divide member nations by applying bilateral pressure and has aimed to turn the probe into a negotiation. Germany is among the members who have been advocating for a negotiated settlement.

According to people familiar with the matter, China had requested in negotiations between the two parties that the EU either not implement the provisional measures at all or consider lower rates based on fewer criteria and then raise them in November if a solution could not be found before final tariffs are due.

According to the people, Beijing has also requested that the prices be changed if circumstances change between now and November. The EU prefers to first create a shared knowledge of the facts before looking at a mutually agreed-upon solution that complies with WTO regulations, they continued, even though rates can be adjusted during the process.

The people said that in the upcoming days, technical discussions between the two parties will pick back up.

The EU stated in a statement last month that the provisional tariffs are being introduced by a guarantee and will only be collected if and when definitive levies are imposed. It’s anticipated that the EU will provide guidelines about the format of the guarantees.

On July 4, Geely and BYD declined to comment on the imposition of interim tariffs. An inquiry for comment was not immediately answered by SAIC.

Moritz Schularick, president of Germany’s Kiel Institute for the World Economy, estimates that the tariffs will likely decrease China imports by a fourth, worth about $4 billion.

Companies like Mercedes-Benz and Volkswagen Group have warned against increased tariffs, and several European automakers have made it clear that they oppose them.

The largest market for Mercedes, VW, and BMW is China.

Post time: Jul-05-2024