EU raises Tariffs on Chinese electric vehicles to protect domestic industry

Brussels: The European Union has increased tariffs on electric vehicles (EVs) imported from China, aiming to safeguard the bloc's automotive sector. The newly implemented tariffs on specific manufacturers range from 17.4 percent to 37.6 percent, in addition to an existing 10 percent duty on all imported Chinese electric cars. This move is likely to escalate EV prices across Europe, reducing their affordability for European consumers.

As per reports, the decision represents a considerable setback for Beijing, already embroiled in a trade conflict with Washington. The EU is China's largest international market for EVs, and China relies on its high-tech exports to rejuvenate its slowing economy. EU officials justify the tariff hike by citing "unfair subsidisation," which they argue allows Chinese-made EVs to be sold at prices significantly lower than those produced within the EU. China, however, has consistently denied allegations from both the US and the EU that it subsidizes excess production to flood Western markets with cheap imports.

The new tariffs, effective from Friday, are provisional while the investigation into China's state support for its EV manufacturers continues. Full implementation is expected later this year.

This trade measure impacts not only Chinese brands but also Western companies manufacturing cars in China, which have drawn scrutiny from Brussels. The EU's goal is to rectify what it perceives as a distorted market. Although the EU's approach seems mild compared to the US's recent increase of total tariffs to 100 percent, it could have more significant effects due to the higher presence of Chinese EVs in Europe. While Chinese EVs are uncommon in the US, they have become increasingly popular in the EU.

Statistics from the Brussels-based environmental group Transport and Environment (T&E) indicate that the market share of Chinese EVs in the EU surged from 0.4 percent in 2019 to nearly 8 percent last year. Patryk Krupcala, a Polish architect awaiting delivery of a China-made MG4, told the BBC, "I chose an MG4 because it is relatively inexpensive, very fast, and has rear-wheel drive like my previous BMW E46."

T&E forecasts that firms such as BYD and the Shanghai Automotive Industry Corporation (SAIC), which owns the formerly British brand MG, could capture a 20% market share by 2027. However, the new tariffs will not uniformly affect all Chinese-made EVs.