It is a decision that she has considered for a long time and weighed each term with a trebuchet. The European Commission announced on Wednesday June 12 that imports of Chinese electric vehicles would henceforth be subject to customs duties of between 37% and 48%, depending on the case, compared to 10% today. That’s a total of 2 billion euros per year.
On average, the Commission calculated, manufacturers established in China – there are also Europeans there, such as Renault or BMW – benefit from subsidies amounting to 21% of their turnover. Therefore, it proposes to apply a countervailing duty (in addition to the 10%) to the amount of this aid, deemed anti-competitive in Europe.
The rate can be adjusted for manufacturers, who are able to prove that they receive less public support, which BYD (17.4%) and Geely (20%) have done. And what Tesla is working on, which has factories in China and has not yet provided all the necessary information. SAIC, which the EU executive believes receives much more aid than the average level of 21%, has refused to exchange data and is therefore subject to a countervailing duty of 38.1%.
For now, Commission experts continue to negotiate with Beijing. “If discussions with the Chinese authorities do not result in an effective solution, these provisional countervailing duties would be introduced from July 4,” but they “would only be collected if definitive duties are imposed” no later than November 2, she said. Which still leaves time for negotiation.
The risk of rising prices for consumers
“Competition must be fair, we had no choice but to act in the face of soaring imports of heavily subsidized electric vehicles from China. Our industry risks being harmed”, explains Valdis Dombrovskis, Vice-President of the Commission. In fact, today a quarter of sales of new electric cars in Europe are Chinese brands, when this market share was 3.9% in 2020. China, which has made this sector a strategic priority, has provided massive support. Central authorities, provinces and cities have all contributed to the development of the sector, whose production capacities currently exceed what local demand can absorb.
While the Twenty-Seven have decided to ban the putting of thermal engine cars on the roads by 2035 and the European automobile industry employs millions of people, they cannot take the risk of being left behind, on the electricity sector, by China. At the same time, by overtaxing Chinese cars, Europeans are taking the risk of inflicting price increases on consumers that are detrimental to their purchasing power and triggering a high-risk trade war with Beijing.
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