Sunday, July 21, 2024

Chinese-made electric vehicles slapped with up to 38% added EU import tariffs

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The notice marks the end of the first phase of a closely-followed investigation that has raised the prospect of an EU-China trade war. The countervailing duty was around the level expected and higher than the average EU duty of this kind at 19 per cent.

The rate will be added to the existing 10 per cent import tariff on the vehicles, bringing the total level to 31 per cent from July 4 for vehicles that were not among those sampled in the probe, after which the European Commission will have four months to affix permanent duties.

During that window, heated debate is expected among member states, many of which have expressed unease at putting tariffs on the imports.

China has vowed to respond, and all eyes are now on where and how Beijing will retaliate.

Through various media and business channels, China has floated the prospect of a 25 per cent tariff on certain imports of large cars, which would mostly impact Germany and Slovakia, as well as investigations into EU pork and dairy imports.

At a press conference in Beijing on Wednesday, Lin Jian, China’s foreign ministry spokesman, panned reports of a tariff as “protectionism”.

“We urge the EU to abide by its commitment to support free trade and oppose protectionism, and work with China to safeguard overall China-EU economic and trade cooperation,” he said.

“China will take all necessary measures to firmly safeguard its legitimate rights and interests.”

A probe into subsidies in the bloc’s brandy sector, which would disproportionately affect French cognac, is ongoing. France has been the commission’s chief supporter in the probe, and is believed to see the duties as a way of encouraging Chinese firms to build EV factories in Europe.

The EU’s duty is a calculated average based on the subsidies uncovered across three Chinese carmakers: BYD, SAIC and Geely.

The duty will be applied to both Chinese brands and Western brands made in China, although US company Tesla has already applied for a lower duty, claiming it has received less in subsidies than the firms probed. That will be the subject of a new inquiry by the commission, with Tesla on the hook for the full duty in the interim. If its application is successful, the company will be rebated the difference.

Brussels’ duty level is lower than those faced by Chinese autos in some other markets. Last week, Turkey slapped a 40 per cent import tariff on all Chinese cars. Last month the United States announced a 100 per cent import duty on Chinese-made EVs.

It is believed that EU member states with large automotive sectors are ready to fight the commission over the imposition of permanent duties in November.

Germany – home to Volkswagen, BMW, Mercedes-Benz and other blue-chip brands, many of which have gone public with their opposition – is expected to lead the backlash, and has already lobbied intensely against the duties. Sweden, home to the now Geely-owned Volvo and Polestar, is another opponent.

“Isolation and illegal customs barriers – that ultimately just makes everything more expensive, and everyone poorer,” German Chancellor Olaf Scholz said last weekend. “We do not close our markets to foreign companies, because we do not want that for our companies either.”

Ding Weishun, an official in China’s ministry of commerce, slammed the EU’s complaints about overcapacity in the Chinese economy as “an excuse” for “typical protectionism”.

“Some Chinese companies choose to build factories in Europe, which is a vivid reflection of China and Europe’s complementary advantages and mutual benefit,” Ding said.

“We hope that the European side and the Chinese side can work together to properly resolve each other’s concerns through dialogue and communication.”

Additional reporting by Ji Siqi in Beijing

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