The European Union has decided to impose significant customs duties on electric vehicles (EVs) manufactured in China, marking its most prominent trade action against China in over a decade. The European Commission announced on Friday that it had received the necessary support to adopt its tariff proposals, allowing for definitive tariffs of up to 36.6 percent, in addition to the current 10 percent, on EVs imported from China.
The vote result is not publicly available, but under EU rules, the introduction of EV duties requires a qualified majority of 15 EU members representing 65 percent of the EU population to support the plan. This decision brings the commission closer to concluding a year-long investigation into China’s state subsidies for EVs.
In preliminary findings released in June, the commission revealed that China’s state subsidy network extended throughout every part of the EV supply chain. These subsidies included preferential lending rates from state-owned banks and tax reductions or exemptions as part of state policies.
China has denied these accusations and expressed firm opposition to the EU’s decision. The country has already taken this matter to the World Trade Organization (WTO) and initiated anti-subsidy probes into various European products.
The EU’s move aligns with similar actions taken by both Canada and the United States. President Joe Biden recently imposed a 100 percent tariff on Chinese EV imports, quadrupling previous tariffs.
Concerns have been raised about Chinese overcapacity flooding European markets with cheaper EVs. The market share of Chinese EVs has surged from 1 percent in 2021 to 20 percent in 2023 according to reports by the commission.
The EU aims to protect its own automotive industry while addressing what it sees as an unfair competitive advantage enjoyed by Chinese automakers due to state subsidy schemes. However, analysts doubt that these tariffs will effectively shield European automakers from competition with cheaper Chinese vehicles.
Despite potential impacts on China’s struggling economy and its grand strategy for key industries like EV manufacturing and solar panels exports, there are doubts about whether these tariffs will significantly affect sales or force bankruptcy among Chinese manufacturers.
