EU to impose taxes on Chinese electric vehicles

The European Union (EU) recently decided to impose additional taxes on imports of Chinese electric vehicles, prompting strong reactions from Beijing. This decision is intended to protect European automakers from growing competition from Chinese manufacturers.

Increased customs duties

Currently, Chinese electric vehicles are taxed at 10% when imported into the EU. However, Brussels has announced a significant increase in these taxes, with additional customs duties of up to 38%. Specifically, BYD will face an additional tax of 17.4%, Geely 20%, and SAIC 38.1%. For other Chinese manufacturers, an average rate of 21% will be applied, adjusted according to the level of public subsidies received by each company.

Western brands producing electric cars in China – including Tesla, Dacia and BMW – will be subject to a 21% tariff.

This decision follows a nearly nine-month investigation by the EU, which revealed that Chinese manufacturers benefit from substantial government subsidies, distorting international competition.

China’s reaction

China reacted immediately, calling the measure “protectionist” and warning that it would take all necessary measures to defend its rights. The Chinese Ministry of Commerce stated that the EU’s decision could violate the rules of the World Trade Organization (WTO), and expressed its intention to lodge a complaint with this institution.

In January, in response to similar measures, China had already launched an investigation into imports of certain European alcoholic beverages, including cognac. Products such as wine, dairy products, pork and luxury cars are also in Beijing’s sights.

Divisions within the EU

This decision revealed divisions within EU member countries. Germany, Sweden and Hungary opposed sanctions, fearing retaliation from China. France and Spain, on the other hand, supported stricter, targeted measures.

German automakers such as Audi, BMW, Mercedes and Volkswagen are particularly concerned, as nearly 40% of their worldwide sales are made in China. They fear that countermeasures by Beijing could seriously damage their exports.

A Window for negotiations

The EU has stressed that these taxes are provisional and that there is still scope for dialogue with China. If no solution is found by July 4, the government will implement these taxes on a provisional basis. Brussels will then have four months to decide whether to make them definitive, leaving a window of negotiation open until November.

Global context

The EU’s decision is part of a wider context of trade tensions between Western countries and China. In the United States, President Joe Biden recently raised tariffs on Chinese electric vehicles from 25% to 100%. This measure has turned the American market into a fortress dominated by the national automaker Tesla.

Ursula von der Leyen, President of the European Commission, has advocated a “more targeted” approach than that of the USA. The aim is to impose taxes in line with the level of damage suffered by European manufacturers.

Conclusion

The EU is seeking to protect its industries while avoiding a trade war with China. This measure aims to curb the import of Chinese electric vehicles, while leaving the door open for future negotiations. The tug-of-war between the EU and China could have major repercussions on trade and economic relations between the two blocs. This would affect several industrial sectors.

To resume

• In a broader context of trade tensions between the EU, the US and China, the EU has imposed additional tariffs. These duties concern imports of Chinese electric vehicles. These taxes are provisional, and could become permanent if no solution is found by November.
• Germany, Sweden and Hungary oppose the taxes, while France and Spain support them.
• Tariffs vary by manufacturer, ranging from 17.4% to 38.1%.
• Concerns about Chinese government subsidies to automakers are behind the decision.
• China has criticized the measure and is threatening retaliation. This is of concern to European carmakers.
• The EU has left the door open for negotiations, and the taxes could be temporary.

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