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EU introduces provisional punitive tariffs on e-cars from China

The EU Commission is getting serious and is introducing provisional punitive tariffs on e-cars from China. Whether they will actually have to be paid remains to be seen. The EU member states may be able to stop them.

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The EU is introducing provisional punitive tariffs on imports of electric cars from China this Friday. Xiao Yijiu/XinHua/dpa

Brussels. The EU is introducing provisional punitive tariffs on imports of electric cars from China this Friday. This is according to the EU Official Journal. The punitive tariffs will affect, among others, BYD, which is currently sponsoring the European Football Championship on a large scale.

The provisional duties are the result of an investigation by the EU Commission. This revealed that the entire value chain for electric cars in China is heavily subsidized and that imports of Chinese electric cars pose a clearly foreseeable and imminent threat of damage to the industry in the EU. According to the Commission, Chinese electric cars are normally around 20 percent cheaper than models manufactured in the EU.

Specifically, the manufacturer BYD is facing a provisional punitive tariff of 17.4%, Geely 19.9% and SAIC 37.6%. Geely produces the electric Smart models #1 and #3 as well as the Volvo EX30, among others. SAIC builds the MG4, which is popular in Germany and came in second place among electric cars just behind the VW ID.3 in the registration statistics from Flensburg in May. For other manufacturers, 20.8 percent is planned, and companies that did not cooperate with the investigation would face a 37.6 percent penalty.

The final introduction of the punitive tariffs is to take place within four months, unless China makes surprising concessions. Until then, the tariffs do not yet have to be paid, only security deposits for them have to be provided.

Concern about countermeasures

The EU Commission's actions are causing concern in Germany, as there are fears of retaliatory measures that could affect German car manufacturers in particular. China is the largest car market in the world and, according to the German Association of the Automotive Industry (VDA), was the third largest export market for cars from Germany in 2023 - after the USA and the UK. However, German companies could not only be affected by countermeasures, but also by the EU measures themselves - as some of them produce in China for export.

With a view to possible retaliatory measures by China, the German Association of the Automotive Industry (VDA) Lastly, if China were to introduce import duties on vehicles with an engine capacity of more than 2.5 liters, this would hit the industry hard. In 2023, around a third of vehicles exported from Germany to China would fall into this category.

Federal Economics Minister Robert Habeck (Greens) is therefore also calling for a political solution by November. He recently emphasized that Germany has no interest in "a race of tariffs and fragmented markets as a result". As an exporting country, China has no interest in this either. French President Emmanuel Macron, on the other hand, has spoken out in favor of punitive measures against China's e-cars in the past.

Negotiations between Brussels and Beijing continue

Talks have recently been held between Chinese Trade Minister Wang Wentao and EU Trade Commissioner Valdis Dombrovskis, among others. However, whether they will lead to a settlement of the trade conflict is completely open. The EU Commission has repeatedly emphasized that a negotiation outcome must eliminate the influence of harmful subsidies. Talks between Brussels and Beijing are set to continue in the coming weeks.

If the authority headed by Ursula von der Leyen comes to the conclusion that China is not moving sufficiently, it can submit a proposal to introduce definitive punitive tariffs within the next four months. The EU states could only stop the proposed tariffs if a so-called qualified majority opposes the proposal.

As a rule, a qualified majority means that at least 15 EU states, which together make up at least 65% of the total population of the Union, must agree. If there is no qualified majority for or against the proposal, the Commission can either adopt it or submit a new, amended version. (dpa)

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