Tariffs of up to 37.6% have been imposed on Chinese car manufacturers amid ongoing negotiations between Europe and China.
The EU has initiated provisional tariffs on Chinese electric vehicles (EVs) starting July 4, as negotiations with China continue, with a November deadline to solidify these tariffs. These preliminary tariffs have particularly impacted SAIC, the owner of MG, which has been accused by the European Commission of inadequate cooperation during the investigation. Consequently, SAIC now faces an additional 37.6% tariff on the wholesale price of its imported EVs, a slight decrease from the initially proposed rate after negotiations.
Other companies like BYD and Geely (which owns brands such as Lotus, Polestar, and Volvo) are subjected to additional tariffs of 17.4% and 19.9%, respectively. The European Commission has also set tariffs for other Chinese firms at 20.8% if they cooperated with the investigation or 37.6% if they did not. Companies that cooperated include eGT New Energy Automotive and BMW Brilliance Automotive, while non-cooperators include Spotlight Automotive, a joint venture between BMW and Great Wall Motor.
The European Commission justifies these tariffs by stating that cheaper Chinese EVs threaten the economic well-being of EU battery electric vehicle (BEV) producers, citing unfair subsidies within China’s BEV value chain. The decision has met resistance from German automakers like Mercedes-Benz, BMW, and Volkswagen Group, who fear retaliatory measures from China, potentially affecting their lucrative exports to the Chinese market.
The provisional tariffs will remain in effect for four months, after which they could become permanent for five years, pending negotiations aimed at achieving a resolution compliant with the World Trade Organization (WTO) standards. This is crucial as the EU represents the largest export market for Chinese EVs, accounting for 33% of China’s total EV exports in 2023.
Meanwhile, the UK has not yet matched the EU’s tariff increases on Chinese EVs, but this issue is expected to become a priority for the next government. The UK automotive industry anticipates that it may need to align with the EU’s stance to manage competitive pressures, with the potential for an investigation by the Trade Remedies Authority into unfair subsidies, pending complaints from British manufacturers.
