EU Set to Impose up to 45 Percent Tariffs on China-Made EVs

A driver prepares to transport cars at a factory of electric vehicle manufacturer Leapmotor in Jinhua, China's eastern Zhejiang Province, on Sept. 18, 2024. Adek Berry/AFP via Getty Images

The European Union (EU) announced on Oct. 29 that it is ready to collect extra customs duties on electric vehicles (EV) made in China after months-long negotiations with Beijing failed to address the issue identified by the bloc’s investigation.

Starting from Oct. 30, the new duties of up to 35 percent—on top of the standard 10 percent tariff—will come into force. These definitive duties will remain in place for the next five years.

The decision wraps up a year-long investigation that has found substantial state subsidies provided by Beijing across almost every part of the EV supply chain, from sourcing raw materials and manufacturing batteries to assembling cars and transporting them to ports. The commission concluded that Beijing’s practices resulted in a “threat of economic injury” to the EU’s automakers.

“By adopting these proportionate and targeted measures after a rigorous investigation, we’re standing up for fair market practices and for the European industrial base,” the EU’s trade chief, Valdis Dombrovskis, said in a statement.

Despite the introduction of the definitive tariffs, Olof Gill, the commission’s trade spokesperson, said the negotiations between Brussels and Beijing will continue.

“Any such solution would have to be effective in addressing the problem identified by the investigation, as well as World Trade Organization-compatible,” Gill told reporters on Oct. 29.

The final decision released on the commission’s website outlined the specific tariff rate for various automakers, which will be added to the standard 10 percent duty that applies to all imported cars.

Chinese EV giant BYD will incur a customs duty of 17 percent, while Geely, owner of Volvo and Polestar, will see a slightly higher tariff, 18.8 percent.

SAIC—the Chinese state-owned company that acquired Britain’s MG, one of Europe’s top-selling EVs—will face the steepest rate, 35.3 percent.

In contrast, Tesla, the U.S. EV manufacturer with a gigafactory in Shanghai, will be subject to the lowest duty, 7.8 percent.

Other Chinese EV makers deemed cooperative by the commission will face tariffs of 20.7 percent, while those considered noncooperative will be hit with the steepest duties, at 35.3 percent.

In response, China’s commerce ministry said in an Oct. 30 statement that Beijing “does not agree with or accept the ruling.”

Beijing’s foreign ministry said the EU’s move will hurt “the cooperation of industrial and supply chains” between the two sides and “undermine the EU’s efforts in green transformation and global climate change mitigation.”

“We hope the EU side continues to advance consultations with the Chinese side in a constructive manner, demonstrate sincerity and flexibility to seek solutions, and avoid the escalation of trade frictions,” Lin Jian, the ministry’s spokesman, said at a regular briefing in Beijing on Oct. 30.

China has filed a complaint with the World Trade Organization (WTO) over the EU’s proposal and held eight rounds of negotiations with Brussels in a bid to avoid the tariff hikes.

The commerce ministry has initiated its own anti-dumping investigations against various imported products from the bloc, including pork and dairy, which could lead to tariffs on exports to China.

Beijing has imposed provisional measures targeting EU brandy imports, the commerce ministry announced on Oct. 8, days after EU leaders gave the green light to the EV duties proposals. The EU has said it would challenge China’s decision at the WTO, pledging to confront “any unfair use of trade defense instruments” against its economy with “utmost seriousness.”

By imposing these tariffs, the EU risks more retaliatory measures from Beijing. Yet analysts suggest that the tariffs could deliver a significant blow to the Chinese regime.

“Not only does this move threaten the competitive edge of Chinese EVs in Europe, but it also sends a clear signal: China’s strategy of leveraging state subsidies and exports to fuel its EV industry may be running out of steam,” David Huang, a U.S.-based researcher focusing on China’s trade policy, told The Epoch Times ahead of the EU’s announcement.

However, the implications of this move may extend beyond trade.

Huang said the regime’s intention to develop EVs—referred to as “new energy vehicles” by Beijing—has nothing to do with improving air quality or reducing carbon emissions, as more than half of China’s energy comes from coal.

“Most of the electricity used to charge these EVs relies on coal-fired power generation and hydropower generation [in China], which are actually more polluting than gasoline,” Huang said, adding that Beijing “just employs the ‘new energy’ narrative as a means to mislead the international community.”

With the EU aligning itself with the United States and other nations to intensify scrutiny of China’s trade policies, Huang said, “The prospect of using EVs as bargaining chips in climate negotiations with other countries is becoming less viable.”

Correction: A previous version of this article gave an incorrect date for the start of the new duties on electric vehicles made in China. The Epoch Times regrets the error.

Luo Ya contributed to this report.