The EU increased tariffs against China’s electric cars. Here’s what changed

Lorenzo Bagnato

13 June 2024 - 11:57

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The European Union imposed significant tariffs on Chinese-made electric vehicles after a similar move by the US.

The EU increased tariffs against China's electric cars. Here's what changed

The European Union officially placed tariffs on Chinese-made battery electric vehicles (BEVs) after announcing them earlier this week. The new law will enter into effect on July 4th across the entire European Union and at different rates according to the manufacturer.

The new tariffs range between 17.1% and 38%, up from the previous 10% already in place.

BYD, the largest EV manufacturer in China and the world, will be hit by a 17.4% tariff. Currently, BYD cars do not retail in Europe but the company pledged in December to open a new factory in Hungary.

A standard BYD Seagull model retails for $9,600 in China, but its price could double on the European market because of its strict safety standards. A 17.4% tariff on a $20,000 car would add $3,480 to the initial price tag.

The range of tariffs was decided based on the level of subsidies received from the Chinese central government. Last year, the EU started an investigation probe on these subsidies, claiming they were disrupting the natural flow of the free market.

Other than BYD, the Commission sampled Geely and SAIC, whose products will receive 20% and 38.1% tariffs respectively. Additionally, the Commission imposed a 21% tariff on compliant companies and a 38.1% tariff on non-compliant ones.

The fight against Chinese EVs

The EU-imposed tariffs followed a similar move by the United States last week. President Joe Biden quadrupled existing tariffs against Chinese EVs to 100%, the most punitive on any Chinese-made product so far.

[The EU tariffs are] is modest compared with the stiff 100% tariffs on Chinese EV imports into the U.S., hiked from 25% last month, by the Joe Biden administration and the 25% provisional duties are in line with market expectations of 20%-25%, in our view,” said Vincent Sun, equity analyst at Morningstar.

Europe and the United States fear that China’s overproduction could wipe away their car industries. Last year, China became the world’s largest producer of cars, with subsidies and cheap labor costs making their prices a fraction of their Western equivalents.

China already used this strategy to strip away some Western strategic industries, including solar panels and wind turbines. Although China remains the world’s largest importer of crude and producer of coal, it’s also the largest producer of renewable energy and batteries.

The car industry is one of the last ones where Europe has a competitive advantage. Without it, the European economic decline could accelerate at an uncontrollable speed.

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