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The largest automaker in Europe, Volkswagen, issued a warning that further tariffs wouldn’t help the continent’s auto sector.
Despite Beijing’s threats that the action would spark a trade war, the European Union has levied additional tariffs of up to 37.6 percent on imports of electric vehicles (EVs) manufactured in China, the group stated.
The European Commission announced on Thursday that the tariffs, which go into effect on Friday, were imposed in response to “unfair” state subsidies.
However, the tariffs are only temporary for four months, and negotiations between the two parties are anticipated to continue throughout that time.
The EU’s executive body, the Commission, began looking into Chinese electric vehicle producers last year to see if government subsidies were unjustly undercutting European automakers.
When the investigation concludes in four months, the Commission may suggest “definite duties” that the 27-member bloc would vote on and that would be in effect for five years.
As trade disputes between the EU and China intensify, with a particular emphasis on green technologies, the decision to increase levies from the existing level of 10% is being made.
The interim levies, which range from 17.4% to 37.6% without backdating, are intended to stop what Commission President Ursula von der Leyen has described as an impending flood of low-cost electric vehicles (EVs) financed by government subsidies.
Customs tariffs on Chinese electric vehicles have already been increased to 100% in the US, and Canada is weighing taking a similar step.
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“There is still a four-month window before arbitration, and we hope that the European and Chinese sides will move in the same direction, show sincerity, and push forward with the consultation process as soon as possible,” said He Yadong, a spokesperson for China’s Ministry of Commerce.
According to the EU, the levies imposed on Chinese manufacturers are 17.4% for BYD, 19.9% for Geely, and 37.6% for SAIC.
Businesses that the EU determined had assisted with the anti-subsidy probe, such as the western automakers Tesla and BMW, will face tariffs of 20.8 percent; those that did not assist will be hit with a penalty of 37.6 percent.
According to estimates from the Commission, the proportion of the EU market held by Chinese brands has increased from less than 1% in 2019 to 8% and may reach 15% by 2025.
