With the U.S. announcing an increase in tariffs on Chinese electric vehicles from the current 25% to 100%, a major investigation by EU investigators into subsidies for China's electric vehicle industry is also being wrapped. For the EU, however, the next decision is "under pressure".
On the one hand, the Biden administration's plan to impose 100% import tariffs in the United States is seen as a way to force the EU to act, while also providing the EU with a benchmark for calculating higher tariffs. On the other hand, some EU member states with close ties to China's auto industry are adamantly opposed.
In September last year, European Commission President Ursula von der Leyen said that the price of electric vehicles in China had been artificially depressed, distorting the EU market. As a result, the EU has opened a countervailing investigation into Chinese EV imports, with the ultimate goal of determining whether additional tariffs on Chinese EVs are needed.
It is reported that the decision on whether to impose temporary tariffs is expected to be made close to the June 5 deadline. The European Commission has previously concluded that the evidence gathered is sufficient to justify the existence of subsidies in the sector.
Just yesterday, the United States announced that it would raise tariffs on electric vehicles from 25% to 100%. Industry insiders believe that this has increased the pressure on the EU to impose tariffs on Chinese electric vehicles, which may be at a higher level of 20% to 60%.
According to a study by Rongsheng Consulting last month, the average countervailing duty in the EU is 19%. According to the analysis, if the EU wants to "block" the influx of Chinese electric vehicles into the EU market, it needs to impose tariffs of about 50%.
However, some EU member states have expressed opposition to any imposition of tariffs on imported cars. The Swedish Prime Minister bluntly said that punitive tariffs, as a one-size-fits-all solution, are not a good idea for importing and exporting countries.
In addition, German Chancellor Olaf Scholz also pointed out that one act is not feasible. He said that at least 50 percent of electric vehicles currently imported from China come from Western brands, which need to be produced in China and then exported to Europe.
At the same time, some economists have warned that raising the price of electric vehicles could hamper the EU's climate goals and hinder the EU's economic development.
In fact, the EU's tariffs are a protectionist act, as the EU is heavily dependent on trade with China, and higher tariffs could undermine the competitiveness of EU countries. According to the data, the EU's EV imports from China surged from $1.6 billion in 2020 to $11.5 billion in 2023, accounting for 37% of the EU's total EV imports.
Despite all the opposition, the European Commission has the power to impose temporary tariffs on imported products without the support of member states. However, for it to become permanent, it must ultimately be voted by a majority of governments.