Up to 45%! EU votes to impose tariffs on Chinese electric vehicles
According to Bloomberg, on October 4, EU member states voted in favor of imposing import tariffs of up to 45% on Chinese-made electric vehicles, a move that exacerbated the broader trade conflict between China and Europe.
Among them, the EU will impose tariffs of 35.3%, 18.8% and 17% on SAIC, Geely and BYD respectively on the basis of the existing 10% tariff; impose a 7.8% tariff on imported cars produced in China by Tesla; in addition, a unified 20.7% tariff will be imposed on other Chinese electric vehicle manufacturers that cooperate with the EU investigation.
It is reported that the tariffs will be officially implemented from next month for a period of five years. According to people familiar with the matter, 10 member states (Bulgaria, Denmark, Estonia, France, Ireland, Italy, Latvia, Lithuania, the Netherlands and Poland) voted in favor, 5 member states (Germany, Hungary, Malta, Slovakia and Slovenia) voted against, and 12 member states (Austria, Belgium, Croatia, Cyprus, Czech Republic, Finland, Greece, Luxembourg, Portugal, Romania, Spain and Sweden) abstained.
However, the EU and China will continue negotiations to seek alternatives to tariffs. The two sides are exploring whether they can reach an agreement on a mechanism to control export prices and quantities to replace tariffs.
In a press release announcing the final decision on tariffs, the European Commission said: "The EU and China are still actively working to explore an alternative that is fully in line with WTO regulations." China's Ministry of Commerce affirmed the EU's political will to continue negotiations, while saying that EU tariffs will "shake and hinder" the confidence of Chinese companies to invest in Europe.
In response to the EU's latest tariff decision, Geely Holding Group issued a statement criticizing it, saying that the move was "unconstructive and may hinder China-EU economic and trade relations and ultimately harm the interests of European companies and consumers." Data shows that last year, the trade volume between the EU and China reached 739 billion euros (about 815 billion U.S. dollars).
On October 4, a spokesman for Volkswagen also said in a statement that EU tariffs were "wrong practices" and would not improve the competitiveness of the European auto industry.
Over the past three years, the share of Chinese-made electric vehicles in the EU market has climbed from about 3% to more than 20%, of which Chinese local brands account for about 8% of the market share, while international companies such as Tesla, which export cars from China to Europe, account for the rest of the market share.
At a time when demand in China's domestic market is slowing and profit margins are squeezed, Chinese electric vehicle manufacturers will have to decide whether to bear the cost of EU tariffs themselves or raise prices to pass on the costs. EU tariffs have prompted some Chinese automakers to consider building factories in Europe because it may help them circumvent tariffs.
However, Kevin Lau, an analyst at Daiwa Securities, said the EU tariffs would have a "smaller impact" on Chinese automakers overall because they sell only a small portion of their vehicles in Europe. He estimated that BYD, Geely Holding Group and SAIC Motor sold only 1% to 3% of their vehicles in Europe in the first four months of this year.