The European Union is imposing higher customs duties on electric vehicles (EVs) imported from China, marking the latest flashpoint in a broader trade dispute over Chinese government subsidies and Beijing’s burgeoning green technology exports.
The higher duties, which took effect on Friday, are provisional and will be subject to a final decision in four months. They come after an eight-month investigation by the European Commission, the EU’s executive arm, which found that Chinese EV manufacturers benefit from substantial government support, allowing them to undercut rivals in the EU on prices and threaten European jobs.
The proposed tariffs range from 17.4% for BYD to 37.6% for SAIC, with other manufacturers, including Western companies like Volkswagen, BMW, and Tesla, facing duties of at least 20.8%. The commission has suggested that Tesla may receive an “individually calculated” rate if duties are ultimately imposed.
The EU’s move is driven by concerns about the rapid growth of Chinese EVs in the European market, with their market share jumping from 3.9% in 2020 to 25% by September 2023. This surge is attributed to the alleged unfair subsidies received by Chinese companies, including cheap land, below-market supplies, and tax breaks.
The commission argues that the subsidized Chinese EVs threaten the EU’s ability to develop its own green technology needed to combat climate change and puts at risk 2.5 million jobs in the auto industry and another 10.3 million jobs indirectly dependent on EV production.
While the EU seeks to encourage affordable EVs, it insists on fair competition, arguing that allowing unfair practices could ultimately lead to less competition and higher prices.
China has strongly criticized the tariffs, calling them “a naked act of protectionism.” While the two sides have held technical consultations, the final decision will be made by the EU in November. The outcome of this trade dispute will have significant implications for the global EV market and future trade relations between Europe and China.