News Brief

European Union Ramps Up Tariffs On Electric Car Imports From China: Potential Trade War Brewing?

Swarajya Staff

Jun 13, 2024, 01:25 PM | Updated 01:25 PM IST

Chinese President Xi Jinping With  President of the European Commission, Ursula von der Leyen
Chinese President Xi Jinping With President of the European Commission, Ursula von der Leyen

The European Union has significantly increased tariffs on electric cars imported from China, eliciting a strong response from Beijing, as per a report by CNN.

The European Commission has announced additional tariffs ranging from 17.4 per cent to 38.1 per cent, on top of the existing EU duty of 10 per cent, bringing the highest overall rate close to 50 per cent.

This provisional decision follows an investigation into China’s state support for electric vehicle (EV) manufacturers. The probe aimed to determine whether Chinese EV prices are artificially low due to subsidies, thereby harming European carmakers.

The commission’s investigation has provisionally concluded that China's EV industry “benefits from unfair subsidisation, causing a threat of economic injury”.

This substantial increase in tariffs reflects a more protective trade stance with China from both Brussels and Washington, driven by concerns that cheap Chinese imports could undermine jobs and strategically important industries.

The EU is also examining China’s support for wind turbine companies and solar panel suppliers.

Chinese EV manufacturers who cooperated with the EU investigation will see a 21 per cent additional duty, while non-cooperative ones will face an extra 38.1 per cent.

In response, China’s Ministry of Commerce has accused the EU of “creating and escalating trade tensions” and claimed the move would harm European consumers, promising to take “all necessary measures to firmly defend the legitimate rights and interests of Chinese companies".

China views EU as a crucial and expanding market for its auto industry.

Meanwhile, some of the EU member states are also divided on the tariffs. France and Spain support them, while German politicians and auto industry executives are opposed.

German Chancellor Olaf Scholz has said that protectionism and isolation “ultimately just make everything more expensive and everyone poorer,” adding, “We do not close our markets to foreign companies because we do not want that for our companies either”.

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