Automotive News Europe — 2024-05-22
Automotive Industry
The EU must inform Chinese exporters whether it intends to impose tariffs by early June 2024.
China signaled it’s ready to unleash tariffs as high as 25% on imported cars with large engines, as trade tensions escalate with the US and European Union.
The China Chamber of Commerce to the EU said it was informed about the potential move by “insiders,” according to a statement posted on X. The levies would affect European and US automakers and have a “significant” impact on relations with the EU, it added.
Beijing is ramping up threats of retaliation as a deadline looms for the EU to announce the results of its probe into China’s electric-vehicle subsidies. The bloc must inform Chinese exporters whether it intends to impose tariffs by early June 2024, and they could go into effect a month later (July 2024), according to Eurasia Group.
Trade tensions between the EU and China have soared since the EV probe was announced, with President Xi Jinping’s visit to Europe this month seemingly doing little to relieve the strain. Xi was seeking to dissuade the bloc from going down the same path as the US, which has unveiled a sweeping set of charges on imports from China — raising concerns in Beijing that American allies may follow suit.
“China’s retaliatory trade investigations and warnings are not deterring the EU,” Eurasia Group analysts wrote in a note on Tuesday, 21 May 2024. “Brussels is eager to send a strong signal to Beijing with its EV probe that the EU will counteract Chinese subsidies and overcapacity.”
The Chinese chamber referred to an interview published by the ruling Communist Party’s Global Times newspaper on Tuesday, 21 May 2024, in which Liu Bin, the chief expert at the China Automotive Technology & Research Center, called for temporarily increasing the tariff rate on cars with engines larger than 2.5 liters.
China imported 250,000 cars in that bracket in 2023 and World Trade Organization rules would permit a tariff of up to 25%, the report cited Liu as saying. The current charge on passenger car imports from Europe is 15%, according to the Ministry of Commerce’s tariff search page.
The ministry did not respond to a request for comment.
The automakers most impacted would be Toyota, Mercedes-Benz, and BMW, said Daniel Kollar, head of consultancy Intralink’s automotive and mobility practice.
Japanese cars such as Toyota’s Lexus brand would only be affected if China imposed tariffs on imports from all nations, instead of targeting shipments from the US or EU.
In addition to the jab at the car trade, China has recently hinted it could impose tit-for-tat levies on European wine and dairy products and begun an investigation into European exports of brandy.
Amid global concern about China’s surging exports, the EV industry is drawing especially close attention. China produces more electric cars than anywhere else, as well as controlling a majority of the battery supply chain.
With a price war and slowing economy at home, its auto makers are seeking to expand overseas. They exported 1.55 m EVs last year, about 40% of them to Europe.
The Biden administration earlier this month announced 100% tariffs on Chinese electric cars, while the EU is investigating Beijing’s subsidies across a range of industries, which has prompted Chinese companies to pull out of rail and energy tenders.
“Certain countries and regions have taken restrictive measures in the new-energy vehicle sector, which run counter to the green development concept,” Liu said in the Global Times interview. “Such measures will only hurt the interests of their own consumers.”