The European Commission announced on October 29th the conclusion of the anti-subsidy investigation and decided to impose a final anti-subsidy duty for five years on battery electric vehicles (BEVs) imported from China.
The EU believes that subsidies received in China's BEV value chain pose a threat of economic damage to EU BEV producers. Therefore, these duties will take effect the day after they are published in the Official Journal.
At the same time, the EU stated that it will continue to work with China to find alternative, WTO-compatible solutions to effectively address the issues identified in the investigation. The European Commission is also open to negotiations with individual exporters on price undertakings, which is allowed by EU and WTO rules.
The sampled Chinese electric vehicle exporters will be subject to the following anti-subsidy duties for at least five years:
Tesla: 7.8%
BYD: 17.0%
Geely: 18.8%
SAIC: 35.3%
Other cooperating companies: 20.7%
All other non-cooperating companies: 35.3%
The provisional duties imposed on BEVs imported from China on July 4, 2024, will not be collected.
This matter of imposing additional import duties on Chinese electric vehicles was first proposed by European Commission President Ursula von der Leyen in her State of the Union (SOTEU) address on September 13, 2023. Over the past year, led by von der Leyen, the EU has gradually announced several rounds of tariff policies on Chinese electric vehicles, and as recently as October 4th, the voting results of the 27 EU member states were announced, with 5 member states resolutely opposed higher duties on electric vehicles, 12 members abstained and 10 in favor of the higher duties.
This decision by the EU has sparked opposition and concern from some EU member states and industry insiders. Imposing duties on imported electric vehicles from China contradicts Europe's goal of promoting electric transportation and advancing climate protection. European countries such as Hungary, Germany, and Finland etc. have expressed opposition to this tariff policy, which sets up trade barriers, implements trade protectionism, and violates WTO free trade agreements.
The EU Commission's vote on Chinese electric vehicle tariffs also highlights the internal division of positions. Major European car manufacturers, including Volkswagen, BMW, and Mercedes-Benz, are unanimously opposed to the imposition of anti-subsidy duties, support fair competition, and advocate for open markets.
The EU seems to be following the United States in retreating to a closed-door trade stance, intending to avoid growing and developing its own electric vehicle industry in free competition. In May of this year, the United States, which lags behind in the development of the electric vehicle industry, further raised import duties on electric vehicles, lithium-ion batteries, and other products imported from China on the basis of the original Section 301 tariffs against China, among which, the tariff on Chinese electric vehicles was increased from 25% to 100%. Canada, a follower of the United States, also followed the United States in raising import duties on Chinese electric vehicles to 100% in August this year. In addition, in September of this year, after Israel remotely detonated electronic communication equipment in Lebanon, the Biden administration also proposed a total ban on Chinese connected car hardware and software and required General Motors and Ford to stop importing cars made in China.
When asked by reporters about the European Commission's announcement of the final ruling on the anti-subsidy investigation of Chinese electric vehicles, a spokesperson for the Ministry of Commerce of China stated that China has always advocated resolving trade disputes through dialogue and consultation and has been making the greatest efforts to this end. Currently, technical teams from both sides are in a new phase of consultation, hoping that the EU will work with China in a constructive attitude, according to the principle of "pragmatic balance," take care of each other's core concerns, and reach a solution acceptable to both sides as soon as possible to avoid the escalation of trade friction.
China has now become an incubator for innovation in the field of electric vehicles, and many European companies hope to obtain the latest technology from the Chinese market. However, the current imposition of additional tariffs may cause them to miss some opportunities for development.
