The EU Commission President Ursula von der Leyen proposed an anti-subsidy investigation on Chinese electric vehicles in September last year, officially launched in October. After several months of investigation, the EU Commission announced on June 12 that a temporary tariff of 17.4% to 38.1% will be imposed on imported Chinese electric vehicles starting from July 4.
Less than a month after the US raised tariffs on Chinese electric cars to 100%, the EU announced additional tariffs: 17.4% on BYD, 20% on Geely, and 38.1% on SAIC. These new tariffs will be implemented on top of the existing 10% tariff in the EU.
If the EU Commission finds during the investigation that Chinese electric vehicle products have caused harm to local industries in the EU due to subsidies, temporary tariffs can be imposed within 9 months after the initiation of the anti-subsidy investigation.
Temporary tariffs can be in place for up to 4 months, during which the EU Commission will decide whether to impose formal tariffs. The deadline for a decision in this case regarding Chinese electric vehicles is November 3.
Temporary tariffs will only be enforced when the investigation concludes and formal tariffs are decided upon.
If the final formal tariffs are lower than the temporary tariffs, or if formal tariffs are not required at all, the initially calculated temporary tariffs will be adjusted accordingly.
Before this, customs usually only require importers to provide bank guarantees.
Temporary tariffs can also apply to previous imported products, even if they arrived before the official enforcement of temporary tariffs, with a maximum retroactive period of 90 days.
Therefore, in this case of the anti-subsidy investigation on electric vehicles, if retroactive tariffs are deemed necessary, calculations can start from early April.
As the largest electric vehicle manufacturer exporting to Europe from China, Tesla is the only manufacturer applying for individual treatment. The EU Commission stated that this manufacturer may receive a “separate calculation rate” at a later stage upon a confirmed request.
According to the procedures stipulated in the basic EU anti-subsidy regulation, on July 3, the EU Commission will release a document on the expected level of temporary tariffs on its official website, detailing the process and results of the investigation. Temporary tariffs will take effect the next day.
EU importers, Chinese export manufacturers and their representative associations, as well as the exporting country – China and other relevant parties, can comment on the investigation results until July 18 and request a public hearing.
The EU Commission mentioned that investigators spent a significant amount of time in China, visiting over 100 companies and completing most of the investigation work. The investigation revealed that the electric vehicle supply chain “receives substantial subsidies in China, posing a foreseeable and imminent threat of damage to the EU industry from imported Chinese electric vehicles.”
After the temporary tariffs come into effect, the Commission has full authority to collect tariffs, but will also consult EU member states and consider their positions. Member states are expected to submit their positions before July 15.
Any investigation should be completed within a maximum of 13 months after initiation, thus this anti-subsidy investigation will conclude on November 3. Following the investigation, the Commission can propose formal tariffs, typically for a duration of 5 years.
If a sufficient number of EU member countries, representing 65% of the EU population, oppose these measures, they can block their implementation. Generally, there is no blocking majority to prevent the implementation of measures.
After formal tariffs are in place, if the Commission deems these measures no longer necessary, a midterm review can be initiated. The midterm review can take place one year after the formal imposition of tariffs. Similarly, if it is found that tariff measures are insufficient to offset the subsidies received by Chinese electric vehicles, the Commission can reevaluate and adjust the tariff measures one year later for more effective counteraction against subsidies.
The EU Commission frequently investigates manufacturers who assemble components elsewhere to evade tariffs.
For the EU, if 60% or more of the component value is imported from the country subject to tariffs, and the assembly’s added value does not exceed 25%, it is considered tariff evasion.
Although this investigation targets domestic Chinese electric vehicles, Western car manufacturers like Tesla, BMW, and Renault that are produced in China and exported to EU countries also face higher costs.