EU to Hike Tariffs on Chinese EVs by 38%

Improve the News Foundation -
0:00
/1861

Facts

  • The EU announced Wednesday its plan to impose additional tariffs of up to 38.1% on Chinese electric vehicles (EVs) on top of the existing 10% tax on cars. Companies that participated in an EU probe will face a 21% tariff instead, with EV manufacturers who didn't facing the 48% mark.1
  • The new tariff, which would equal over €2B (US$2.16B) in taxes per year, follows an investigation into alleged unfair trade practices by China, including companies such as BYD and Geely, which owns part of the Swedish brand Polestar, and British company MG.2
  • The first tariffs will take effect on July 4, including a 17.4% tax on BYD, 20% on Geely, and 38.1% on SAIC. The EU said the new policy would proceed if 'discussions with Chinese authorities [do] not lead to an effective solution' by that date.3
  • The EU cited its belief that the Chinese EV industry 'benefits heavily from unfair subsidies in China and that the influx of subsidized Chinese imports at artificially low prices,' which it said is a 'threat' to the EU market.4
  • While China's stake in the EU EV market is currently 7.9%, it's projected to reach past 20% by 2027. However, the tariffs will also affect major European brands that manufacture in China, including BMW, Mercedes-Benz, and Volkswagen. US company Tesla has also requested a delayed tariff imposition until later this year.5
  • The EU's decision follows its €291B (US$313B) trade deficit with China last year. This also follows the US government's recent 100% tariff on Chinese EVs.1

Sources: 1wsj.com, 2Guardian, 3Chinadaily.com.cn, 4New York Times and 5Euronews.

Narratives

  • Anti-China narrative, as provided by KPRC. China is clearly not playing by the rules regarding its domestic subsidies, which allow Chinese car companies to sell cars at twice the rate in Europe as they do at home. While Europe would love to engage in free and fair market competition, EU leaders cannot stand by and watch as their innovators and workers are pushed out of business thanks to China's economic schemes.
  • Pro-China narrative, as provided by Global Times. With global demand for new technologies and the resources required to build them, China is fostering a domestic culture of innovation, which has resulted in world-renowned EVs that Europeans love to buy. Instead of taxing Chinese cars, the EU should implement its own policies to boost European manufacturers, which would create even more competition.
  • Narrative C, as provided by Europeanconservative. The EU wouldn't have this problem if it didn't dive into the green energy fad so blindly. The initial EV boom in northern Europe was sparked by bountiful government subsidies, but the subsequent spending spree ended far sooner than expected. This is why companies like Mercedes and Renault won't be achieving their EV transition goals until well into the next decade.

Predictions