After the EU parliamentary elections, dramatically changing its policy towards Chinese Electric Vehicles (EVs) was pretty much at the top of the to-do list for the EU institutions. Despite strong opposition from Germany, Europe has followed America's lead in imposing big tariffs.
It means potentially rough roads ahead for the auto industry.
The EU has announced additional tariffs of up to 38.1 percent on Chinese-made EVs. Add that to the 10 percent that exists for vehicles coming into the bloc, and some manufacturers like SAIC, the largest auto company listed on China's A-share market, will now see the price of their EVs face almost a 50 percent hike duties.
It follows claims that Chinese EV makers benefit from Beijing subsidies, which allow them to undercut the price of European-made cars.
EU Vice President Magraitas Schinas told reporters: "This value chain benefits from unfair subsidiarization which is causing a threat of economic injury to EU battery electric vehicles producers."
The EU is to impose duties of up to 38% on Chinese electric vehicles./Reuters
German Auto makers had lobbied hard for lower tariffs with Mercedes Benz CEO, Ola Kallenius told CGTN that Chinese companies are only doing now what European and U.S. carmakers did decades ago.
"Carmakers go around the world and want to test the markets and see what they can do. I think that's just a natural progression. So, whereas we take all competition competitors seriously, the ones that we know and new competitors coming, you have to focus on your own strategy," Kallenius said.
China has said it will retaliate in kind. A statement by NIO, one of the impacted manufacturers, said they intend to continue to "do business in the EU and explore new opportunities within Europe despite protectionism."
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China's commerce ministry said it would take all the necessary measures to safeguard the legitimate rights of Chinese auto makers, adding that China will closely monitor development of the situation.
The EU has announced additional tariffs of up to 38.1 percent on Chinese-made electric vehicles (EVs)./Reuters
Sales of Chinese-made Battery Electric Vehicles in the EU have increased dramatically in the last few years. 17,809 were sold in the bloc in 2017. Last year, that figure rocketed to 437,554. The EU currently looks likely to follow the U.S. down the tariff route despite the likely impact on European manufacturers exporting to China.
Uli Bruckner, Jean Monnet Professor for European Studies at Stanford University in Berlin told CGTN a trade war could be on the horizon.
"The WTO is no longer working the way it should.Now we have a dysfunctional global order, and it is about a power play in which we have those who can afford to subsidize massively, like the United States with the Inflation Reduction Act. This could set a stage in which others are forced to counter-strike," Bruckner said.
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The tariffs could come into play as soon as next month but to make them permanent will require a vote by member states. However, if 15 member states vote against the proposal, it won't pass.
As it stands, Germany, Hungary, Sweden, and Ireland look most likely to oppose, they will need to add more names to that list over the coming months, if a full on EV trade war is to be averted.
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