Automotive News Europe — 2024-07-04
Automotive Industry
The provisional duties will apply as of 5 July 2024, and definitive duties could begin in November 2024.
The European Union moved ahead with plans to impose provisional tariffs on the imports of electric vehicles made in China that would raise rates to as high as 48%, a step likely to escalate trade tensions with Beijing.
The EU confirmed in a news release on 4 July 2024 that under its anti-subsidy investigation, it would apply provisional duties on three Chinese manufacturers that were sampled for the investigation.
MG maker SAIC Motor faces a 37.6% tariff on top of the existing 10% rate, while Geely and BYD will be hit with additional charges of 19.9% and 17.4%, respectively.
Other EV producers in China that cooperated with the investigation but have not been sampled will be subject to a weighted average duty of 20.8%, while companies that did not cooperate will face an additional 37.6% levy.
The provisional duties will apply as of Friday, 7 July 2024, and definitive duties would kick in by November 2024 unless the two sides come to some kind of alternative solution or a qualified majority of EU member states block the final move.
Tesla may receive an individually calculated duty rate at that definitive stage following a request to be sampled.
The EU, which said that talks with China have intensified in recent weeks, said the probe concluded that China subsidizes its EV industry to a degree that causes economic harm to the bloc’s automakers.
“We are continuing to engage intensively with China on a mutually acceptable solution,” Valdis Dombrovskis, an executive vice president of the European Commission, said in a statement. “Any negotiated outcome to our investigation must clearly and fully address EU concerns and be in respect of WTO rules.”
China has threatened to retaliate and has already launched a targeted anti-dumping probe on pork imports. The findings of an investigation into EU spirits are due early next year but could come anytime, based on what has happened before.
Beijing has warned it could hit European agricultural goods, aviation and cars with large engines. China could also decide to challenge the EU’s probe at the World Trade Organization.
The EU and China have been consulting on a way forward and the two sides plan to continue conversations over the next four months.
For Brussels, any solution has to be grounded in WTO rules and address the underlying harmful subsidies the probe has identified.
Beijing has looked to transform the investigation into a negotiation and has been trying to divide member states by pressuring them bilaterally, Bloomberg previously reported. Some member states, including Germany, have been pushing for a negotiated compromise.
In talks between the two sides, China had asked the EU not to introduce the provisional measures at all — or to consider lower rates based on fewer criteria and then increase them in November 2024 if a solution could not be found before definitive tariffs are due, according to people familiar with the matter.
Beijing has also asked whether the rates can be adjusted between now and November if the situation changes as the two sides continue to talk, the people said. Though rates can be tweaked during the process, the EU’s preference is to first establish a common understanding of the facts before exploring a mutually agreed solution that adheres to WTO rules, they added.
Technical talks between the two sides will resume in the coming days, the people added.
The provisional duties are being introduced by a guarantee, and would be collected only if and when definitive duties are imposed, the EU said in a statement last month (June 2024). The EU is expected to issue guidance on the form the guarantees will take.
Geely and BYD declined to comment on 4 July 2024 on the provisional tariffs going into effect. SAIC did not immediately respond to a request for comment.
The tariffs will likely cut imports from China by a quarter, amounting to a value of roughly $4 bn, according to an estimate by Moritz Schularick, president of Germany’s Kiel Institute for the World Economy.
Many European automakers have made clear they are opposed to higher tariffs, with companies such as Mercedes-Benz and Volkswagen Group warning against them.
China is the biggest market for Mercedes, VW and BMW.