Heavy surcharge

EU decides on China punitive tariffs: this is how high they will be

(Bild: APA/AFP/STR)

Imports from China are putting the car industry on our continent under massive pressure. For this reason, the EU Commission wants to take tough measures against them. However, German car manufacturers are skeptical.

The EU Commission now wants to put a stop to Chinese electric cars imported into Europe and impose punitive tariffs on them. This was announced by the Brussels authority on Wednesday.

Background: The Brussels authority launched a competition investigation at the end of 2023. The reason was that China was suspected of illegally subsidizing electric cars. The results of the anti-dumping investigation are now to be discussed with the Chinese authorities. If no solution is found in these negotiations, the punitive tariffs would be provisionally introduced on July 4. The customs authorities of the 27 EU countries would then have to demand the import tariffs in the form of a guarantee.

The punitive tariffs will only actually be imposed once the measure has been officially confirmed - this requires the approval of the EU states.

The Chinese manufacturer BYD is pushing into the EU market with affordable electric cars.

(Bild: BYD)

How much the manufacturers should pay
The EU Commission envisages different tariffs for different car manufacturers: BYD will have to pay an import duty of 17.4 percent, Geely (Volvo, Polestar) will have to pay 20 percent and Volkswagen's Chinese state-owned partner group SAIC will have to pay 38.1 percent. Other car manufacturers that have cooperated with the EU investigation are said to be affected by an "average weighted duty rate of 21 percent".

A duty of 38.1 percent is to be levied on e-cars from manufacturers that have not cooperated. Currently, a uniform duty rate of ten percent applies to all e-cars.

Punitive tariffs would be the stupidest thing the EU could do.

KTM-Eigentümer Stefan Pierer

German car manufacturers skeptical
Top managers from BMW, Mercedes and Volkswagen have warned against imposing import duties on vehicles from China. According to estimates by analysts at HSBC bank, German car manufacturers generate 20 to 23 percent of their profits in the world's second-largest economy. In addition, a large proportion of the cars imported into the EU from China come from European manufacturers.

KTM owner Stefan Pierer from Austria's industry recently spoke out clearly against punitive tariffs. "Punitive tariffs would be the stupidest thing the EU could do," he said at the end of May.

Chinese manufacturers unimpressed
According to an industry association, manufacturers from China are sticking to their plans for their European business despite the threat of anti-dumping duties. "Chinese companies will continue to steadfastly push ahead with their business in Europe and integrate into the local markets," said Cui Dongshu, Secretary General of the Chinese Car Association (CPCA) on Tuesday.

Chinese e-cars about to be shipped

(Bild: AFP)

However, Cui was keen to ease the situation: the automotive industry plays an important role in the European labor market. "Chinese companies will not take aggressive steps to jeopardize the stability of the labour market in Europe."

However, Chinese car exports have recently suffered a setback. In May, four percent fewer electric cars and hybrid vehicles were sold abroad than in the previous year, according to CPCA data. Across all drive types, exports even fell by nine percent. "The export data did not meet our expectations," said Cui.

The reason for the tariffs is Chinese state aid
In September 2023, EU Commission President Ursula von der Leyen announced an investigation into Chinese state aid for car manufacturers, citing the risk that China could flood Europe with cheap electric vehicles at the expense of European manufacturers. France's car industry in particular is likely to welcome today's move. Germany, on the other hand, for whose car manufacturers China is an important sales market, fears possible retaliatory measures from Beijing. In addition, many German car manufacturers have outsourced their production of e-cars to China and would therefore be affected by the import tariffs themselves.

EU Commission President Ursula von der Leyen during her speech on the state of the European Union.

(Bild: AP)

The picture becomes more nuanced when the focus is shifted away from the automotive industry to industry as a whole: according to a recently published survey by the Cologne Institute for Economic Research (IW), which is close to employers, a majority of German industrial companies are in favor of punitive tariffs on electric cars from China. This could also have something to do with past experience. When announcing the anti-dumping investigation, von der Leyen referred to the fate of the European solar industry, which had suffered greatly from Chinese competition in the past.

However, supporters of customs duties in France are also likely to be affected by possible countermeasures from the People's Republic. Following the EU's announcement that it would launch an investigation, Beijing responded with its own investigation into European liqueur imports, de facto targeting French cognac producers.

Pressure could increase further
China is currently suffering from weak domestic demand, which is also prompting its own companies to focus on exports. In response, the USA recently quadrupled its tariffs on Chinese electric vehicles from 25% to 100% - which is likely to further increase the pressure on the European market.