The European Union announced Wednesday (June 12) the pre-disclosure of temporary tariffs on electric vehicles from China in response to the unfair subsidies policies from the Chinese government. Some Chinese electric vehicle manufacturers will face additional temporary tariffs of up to 38.1%.
According to the European Commission, as part of an ongoing anti-subsidy investigation, they have tentatively concluded that China’s supply chain for battery electric vehicles (BEV) benefits from unfair subsidies, posing an economic threat to EU manufacturers of pure electric vehicles.
Therefore, the EU pre-disclosed on Wednesday the temporary anti-subsidy tariffs on Chinese electric vehicles. On top of the existing 10% tariff, BYD, Geely Auto, and SAIC Group will face additional tariffs of 17.4%, 20%, and 38.1%, respectively. This means the EU will impose tariffs of nearly 50% on SAIC Group’s electric vehicles.
The European Commission initiated the anti-subsidy investigation on BYD, Geely Auto, and SAIC Group, three Chinese state-owned enterprises, through a sampling process last October. Other Chinese BEV manufacturers who cooperated with the investigation but were not sampled will face additional tariffs of 21%, while all other non-cooperating Chinese BEV manufacturers will be hit with a 38.1% tariff.
On October 4, 2023, the European Commission launched an anti-subsidy investigation into imported passenger pure electric vehicles from China. Any investigation should be concluded within 13 months of initiation. The Commission has the authority to announce temporary anti-subsidy taxes within 9 months from the start of the investigation, by July 4 at the latest. The final tariffs will come into effect within 4 months following the implementation of temporary tariffs, usually lasting for five years.
After the pre-disclosure of the temporary anti-subsidy taxes on Wednesday, the European Commission has informed all relevant parties including the Chinese government, Chinese companies, and EU member states.
The Commission stated it has been in contact with Chinese authorities to discuss the investigation results and potential solutions to address the issues. If no effective solution is reached with the Chinese authorities, the temporary anti-subsidy tariffs will start being collected around July 4, with the specific procedures determined by individual member state customs.
The European Commission will provide detailed information separately to the sampled companies, who will have 3 days to comment on the accuracy of the tariff calculation results. If sufficient rebuttal evidence is provided, the Commission can make modifications in accordance with the law and calculate new temporary tariff rates.
By no later than July 4, the European Commission will publish a regulation in the Official Journal explaining the temporary investigation results leading to these tariffs. The temporary tariffs will take effect the day after publication. All stakeholders will have 15 days to comment.
The EU stated that the purpose of imposing temporary anti-subsidy tariffs is to eliminate the unfair competitive advantage Chinese electric vehicle manufacturers gain from China’s unfair subsidy schemes. These tariffs are intended to ensure fair competition for the EU and Chinese industries.
According to the European Commission, electric vehicles produced by American giant Tesla in China will be subject to separately calculated tariffs in the final stage. Any other Chinese manufacturing companies not included in the final sampling may request an accelerated review based on the basic anti-subsidy regulation requirements after the EU implements final tariff measures. The review process should be completed within 9 months.
When asked about potential additional measures the EU might take to support its electric vehicle industry if the temporary tariffs become final, Megan Khoo, a former defense analyst at Booz Allen Hamilton consulting firm and a research and policy advisor for the UK non-governmental organization Hong Kong Watch, told Epoch Times that the European Commission should further increase import tariffs on Chinese electric vehicle companies after the anti-subsidy investigation to protect the EU’s domestic automotive industry and human rights worldwide. In 2023, Chinese electric vehicles accounted for 37% of EU electric vehicle imports, increasing from $1.6 billion to $11.5 billion within just four years.
Khoo suggested that besides tariffs, the European Commission should use non-traditional tools to safeguard the EU automotive industry. In a recent report titled “Ain’t No Duty High Enough,” the Rhodium Group indicated that considering sensors and cameras in vehicles, this may include designating Chinese electric vehicles as cybersecurity risks and introducing an electric vehicle version of the EU’s 5G toolbox.
As the trade war between the EU and China escalates, the EU is also conducting an anti-dumping investigation into Chinese biodiesel imports.