European Union Poised to Impose Steep Tariffs on Chinese Electric Vehicles
In a move that could spark a trade dispute with Beijing, the European Union is set to impose tariffs of up to 45% on Chinese-made electric vehicles (EVs) as early as Friday. France, Greece, Italy, and Poland have pledged their support for the measure, which is expected to pass with a simple majority.
The European Commission has been investigating allegations of unfair subsidies granted to Chinese EV manufacturers, which have seen their market share in the EU surge from 3.5% in 2020 to 27.2% in the second quarter of 2024. Commission President Ursula von der Leyen has warned that the EU must protect itself against a potential flood of cheap Chinese EV imports.
The proposed tariffs have sparked a heated debate within the EU, with Germany, the region’s largest economy and a major car producer, yet to declare its position. German carmakers, which rely heavily on Chinese sales, have voiced opposition to the tariffs, citing concerns about retaliation from Beijing.
China has already launched its own probes into EU imports of brandy, dairy, and pork products, seen as a retaliatory move against the EU’s investigation into EVs. If the tariffs are implemented, Chinese EV makers will face a difficult decision: absorb the costs or raise prices to cover the billions of dollars in new duties.
Some Chinese automakers are considering investing in European factories to circumvent the tariffs, despite higher labor and manufacturing costs. French President Emmanuel Macron has described the level of Chinese subsidies as “unbearable,” while the Czech industry and trade ministry has expressed concerns about China’s “unfair practices.”
The EU executive has indicated its willingness to continue negotiating an alternative to tariffs with China, including a price undertaking involving minimum import prices and volume caps. However, the clock is ticking, and the EU is poised to take a significant step in protecting its domestic auto industry from what it sees as unfair competition.
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