Punitive tariffs on e-cars

Punitive tariffs: Wifo does not expect price jumps

(Bild: APA/AFP/Fayez Nureldine)

According to numerous economic researchers, the punitive tariffs introduced by the EU on Chinese electric cars will cause imports from Asia to slump, but no major price increases are expected.

The tariffs will come into force provisionally at midnight on Friday after Brussels and Beijing failed to reach an agreement in the dispute over the People's Republic's subsidy and trade practices. Provisional means that the customs authorities will initially demand the duties as a guarantee. Whether they will then be retained depends on whether an agreement is reached with China in the coming months.

The EU accuses China of unfair subsidies for its own car manufacturers. In Brussels' view, these distort competition.

(Bild: AFP/Richard A. Brooks)

The EU member states must also agree to the tariffs before they can actually be imposed. Depending on the car manufacturer, the EU Commission envisages tariffs of 17.4 to 37.6 percent.

The economic research institute Wifo does not expect a major price effect. With increases averaging 0.3 to 0.9 percent, these should be rather low. However, the "effects could be higher in the short term", according to the economic researchers in a current analysis, which Wifo prepared together with the Kiel Institute for the World Economy (IfW Kiel) and the Supply Chain Intelligence Institute Austria (ASCII).

Opportunity for European car manufacturers
The tariffs open up an opportunity for European car manufacturers. "Value added in the EU car industry is expected to increase by 0.4 percent, while it will fall by 0.6 percent in China," explains Julian Hinz, Research Director Trade Policy at the Kiel Institute. In general, economists expect the decline in imports to be offset by more sales by European producers in the EU and partly by more imports from third countries. 

Controversial measure
The tariffs on electric cars are considered controversial among economists and parts of the economy. There are fears of tough countermeasures from China. For example, the application of anti-dumping duties of 50 percent on pork deliveries from the EU is under discussion. "That would be unpleasant for pig farmers, especially in Denmark, Spain and Germany. However, as exports have been falling significantly for several years, this measure would probably only have a minor impact on prosperity in the EU," estimates Wifo.