EU slaps tariffs on Chinese electric vehicles

The tariffs will begin on July 4 and range from 17.4% to 38.1%, depending on the model.

The European Union (EU) has decided to implement tariffs on makers of battery electric vehicles (BEV) in China. The exact tariff depends on the make of car and will come on top of the existing 10% duties for exports into the EU.

The European Commission (EC) said the tariffs would be 17.4% for BYD, 20% for Geely and 38.1% for Chinese state-owned SAIC Motor. Foreign fims that make vehicles in China are also not immune from the tariffs. Tesla, which makes cars in China “may receive an individually calculated rate”.

The bloc, which notified carmakers on June 12, will increase the tax on imports by July 4, if no resolution can be found before then. The move comes amid increasing uncertainty around global supply chains as a result of conflict, inflation and diversification strategies. 

Other companies cooperating with an ongoing EC investigation would face a tariff of 21% and non-cooperating companies of 38.1%. BYD and Geely were below 21% for helping with the investigation. The investigation which began last year "provisionally conludes that electric vehicle value chains in China benefit from unfair subsidies", according to a statement. November is the deadline for a decision to make the tariffs permanent. 

The tariffs follow a similar move by the US White House last month, when the Biden administration imposed a 100% border tax on electric cars from China.

The Chinese Chamber of Commerce to the EU expressed “its shock and disappointment” with the trade measures.

China exported around €10 billion ($10.8 billion) of electric cars to the EU in 2023. Some Chinese manufacturers have for several years been ramping up production in the EU through building manufacturing plants in Eastern Europe.

China already applies 15% tariffs on European EVs and now the market is waiting to see if China increases this in a retaliatory move. 

Geopolitical tensions are increasing in a year with multiple elections, including recently in India -- where a coalition under prime minister Nerendra Modi is set to take charge, the UK, on July 4, and the US on November 5. France is the latest country to call an election in a surprise move by president Emmanuel Macron after his party had a poor showing in the recent EU elections. France will elect a new parliament on June 30 and July 7. 

Inflation good news from the US? 

On June 12 the US released its latest inflation data with the headline consumer price index falling to 3.3% from 3.4% in May. This has once again sparked expectations of an interest rate cut from the US Fed sooner rather than later. 

However, it remains to be seen what path the Fed will take after mixed comments from the chair of the Fed Jerome Powell after the Fed's regular meeting, also on June 12. 

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