Brussels worries that steady growth in imports of Chinese electric vehicles could cause an irreparable loss of competitiveness in the growing sector.
ADVERTISEMENTChina has issued a fresh threat against the European Commission’s anti-subsidy investigation into electric vehicle (EV) imports, which could lead to additional tariffs to offset the alleged use of state aid.
Chinese-made EVs are sold across the bloc at significantly lower prices than their European rivals, an omission Brussels has linked to generous financial aid injected by the Chinese government into local firms.
The study, announced last September, is nearing the end of its first phase and provisional tariffs could be announced as early as next month. The EU currently applies a 10% tax on all imported cars, regardless of their origin.
However, the original June 5 deadline was pushed back until sometime after the European Parliament elections, according to Reuters and Der Spiegel.
Still, China’s foreign ministry is raising its voice in an attempt to dissuade the Commission from going ahead with what it sees as “protectionist” plans.
“China urges the EU to stop the investigation as soon as possible so as not to disrupt China-EU economic and trade cooperation and the stability of industrial and supply chains,” ministry spokesman Mao Ning said Thursday.
“If the EU insists on continuing the investigation, China will not sit back and watch.” We will take all necessary measures to firmly protect our legal rights and interests.”
The China Chamber of Commerce in the EU (CCCEU) earlier said that if the additional tariffs went ahead, the country could retaliate by raising its tariffs on imported large-engine vehicles to a maximum of 25%, which would affect some European carmakers that depend on the Chinese market.
Beijing may also target sales of French brandy after launching an anti-dumping investigation earlier this year. France is considered one of the strongest supporters of the EU investigation.
The specter of Chinese retaliation could weigh heavily on the minds of member states, which would have to approve any tariff increase by a qualified majority.
Ahead of trade ministers meeting in Brussels on Thursday, Swedish and Irish envoys expressed reservations about the Commission’s course of action, stressing the importance of maintaining free and open markets.
“From a general point of view, and I say this all the time, we are a bit skeptical, we don’t want to be involved in any kind of trade war,” said Sweden’s Johan Forsel.
“Obviously what’s happening in China is a problem, but there are also risks when it comes to these kinds of tariffs,” he added.
Germany, the world’s leading car exporter, has also expressed doubts, while Hungary, which is keen to attract Chinese investment, is strongly opposed.
Asked if the Commission was losing political support as the deadline approached, Executive Vice President Valdis Dombrovskis said the investigation was “ongoing” and any potential tariff would be calibrated against evidence gathered on the ground.
“This is a fact-based investigation,” Dombrovskis said. “We still think it is important to move forward and ensure that we level the playing field in this important area of competition, in a sense exercising our rights to defend against market distortions.”
The Commission appreciates this Chinese brandssuch as BYD, Nio and Xpeng, have already captured 8% of the European electric car market, up from 4% in 2021, and could jump to 15% in 2025 if the trend continues unabated.
Rhodium Group report shows that EU imports of Chinese-made EVs rose from $1.6 billion (€1.5 billion) in 2020 to $11.5 billion (€10.6 billion) in 2023. The report expects to impose tariffs in the “15-30%” range, but warned that Chinese brands have plenty of room to adjust their prices and resist the increase.
ADVERTISEMENTIn contrast, the US administration recently announced a 100% increase, increasing pressure on Brussels to take a tougher stance.