New EU Tariff Imposes Almost 40 Percent Duty on Chinese Electric Cars

The European Union has imposed a punitive duty of up to 37.6 percent on Chinese electric cars, which will take effect on Friday. This decision is based on subsidies that Chinese car manufacturers have received, which the EU considers to be unfair. Although the new tariffs are temporary for now, they will be in place for four months. During this period, discussions between China and the EU regarding customs will continue.

The temporary tariffs range from 17.4 to 37.6 percent, similar to the Commission’s preliminary decision announced in June. If Chinese electric cars are imported into Europe after the tariffs come into effect, they will be subject to punitive duties on top of the current 10 percent import duty. There are no retroactive duties for cars already imported before this decision.

The temporary tariffs give the EU more time to investigate if Chinese state subsidies to electric car companies have been unfair. If permanent tariffs are imposed at the end of the investigation, they would be valid for five years. However, if no permanent duties are imposed or if they are lower than the temporary ones, the tariffs will be revised downwards accordingly.

The decision affects three Chinese electric car manufacturers, with varying additional duty levels set for each. Byd, Geely, and SAIC face tariffs of 17.4 percent, 19.9 percent, and 37.6 percent respectively. Other brands that cooperated with the EU investigation will have a 20.8 percent duty, while non-cooperating companies will face the 37.6 percent tariff.

China has threatened to respond to these tariffs by imposing restrictions on European products. In June, China initiated an anti-dumping investigation against pork imported from the EU, potentially leading to punitive tariffs. The country may extend these import restrictions to other European products as well, including aviation products and large-engine cars. China could also challenge the EU’s decision at the World Trade Organization (WTO). EU Trade Commissioner Valdis Dombrovskis stated that the EU’s actions are in line with WTO rules and do not warrant countermeasures.