The European Union has announced a significant increase in tariffs on Chinese electric vehicles (EVs), a move aimed at safeguarding the bloc’s automotive industry. Effective from Friday, the new tariffs on individual manufacturers range from 17.4% to 37.6%, in addition to the existing 10% duty on all electric cars imported from China.
This decision is expected to raise the prices of EVs across the EU, potentially making them less affordable for European consumers. The impact is especially severe for Chinese carmakers, as the EU represents the largest overseas market for China’s EV industry. Beijing is relying heavily on high-tech exports to rejuvenate its slowing economy, making this a significant setback. EU officials have justified the tariffs by pointing to what they describe as “unfair subsidisation” of Chinese EVs, which has allowed these vehicles to be sold at substantially lower prices compared to those produced within the EU. This influx of inexpensive EVs has been cited as a distortion of the market, necessitating corrective measures. China, however, has consistently denied allegations from both the US and the EU that it subsidises excess production to flood Western markets with cheap imports.
While these tariffs are currently provisional, pending the outcome of an ongoing investigation into Chinese state support for its EV manufacturers, they signal a strong stance from the EU. The final imposition of these duties is expected later this year. The move has broad implications, not only for Chinese brands but also for Western firms manufacturing cars in China. Brussels’ intent is to level the playing field, addressing what it perceives as market distortions caused by subsidised Chinese imports. Although these tariffs might appear moderate compared to the US’s recent decision to raise its total tariffs to 100%, their impact could be more pronounced in the EU, where Chinese EVs have a more significant presence.
Chinese EV brands have seen a notable increase in market share within the EU, rising from 0.4% of the total EV market in 2019 to nearly 8% in 2022, according to data from the Brussels-based green group Transport and Environment (T&E). Projections from T&E suggest that companies like BYD and Shanghai Automotive Industry Corporation (SAIC), which owns the formerly British brand MG, could capture a 20% market share by 2027. Despite the broad application of the tariffs, not all Chinese-made EVs will be equally affected. Some manufacturers may have strategies to mitigate the impact of these duties. An architect from Poland, expecting delivery of a China-made MG4, shared his decision, noting that the MG4 was chosen for its affordability and performance, drawing a comparison to his previous BMW E46. As the trade dispute between the EU and China unfolds, the automotive industry is poised for a period of adjustment. The tariffs represent a critical juncture in international trade relations and could reshape the competitive landscape of the EV market in Europe.
