BRUSSELS - The European Union is preparing to apply additional duties of up to 38.1% on imported Chinese electric vehicles starting next month, a move likely to draw possible retaliation from China.
Less than a month after Washington quadrupled duties for Chinese EVs to 100%, the European Commission said on Wednesday it would set tariffs of 17.4% for BYD, 20% for Geely and 38.1% for SAIC because they benefited from what it said were excessive subsidies from Beijing.
China’s commerce ministry said it would closely monitor the development and resolutely take “all necessary measures to safeguard the legitimate rights of Chinese companies”.
The EU provisional duties are set to take effect on July 4, with an anti-subsidy investigation set to continue until Nov 2, when definitive duties, typically for five years, could apply.
The Commission said it would apply rates of 21% for companies deemed to have cooperated with the investigation and of 38.1% for those it said had not.
The new tariffs will come on top of the existing EU tariff of 10%. Western producers such as Tesla and BMW that export cars made in China to Europe are considered cooperating companies.
Margaritis Schinas, an EC vice-president, told a news conference that Chinese-built cars were benefiting from unfair levels of subsidies, threatening EU producers.
China has rebuked the EU over the anti-subsidy investigation, urged cooperation and lobbied individual EU countries, but not fully spelled out what its response to tariffs would be.
Growing alarm over Chinese industrial overcapacity flooding the EU with cheap products, including EVs, is opening a new front in the West’s trade war with Beijing, which began with Washington’s import tariffs in 2018.
EU trade policy is turning increasingly protective against the global ramifications of China’s production-focussed, debt-driven debt model.
“This anti-subsidy investigation is a typical case of protectionism,” Lin Jian, a foreign ministry spokesperson, told a press conference in Beijing on Wednesday.
“We urge the EU to abide by its commitment to support free trade and oppose protectionism, and work with China to safeguard the overall situation of China-EU economic and trade cooperation.”
The EU tariffs increase the risk of a trade war and will not strengthen the competitiveness of Europe’s auto sector, the president of Germany’s automotive industry body VDA said on Wednesday.
“The potential damage that could result from the measures now announced may be greater than the potential benefits for the European — and in particular the German — automotive industry,” said Hildegard Mueller.