EU gives final green light to steep tariffs on Chinese electric cars

The European Commission has given the final green light to steep tariffs on electric vehicles (EVs) made in China, officially closing the probe that began one year ago.

The tariffs will remain in place for five years and will apply from the day after the regulation is published in the bloc’s official journal, expected to be between Tuesday and Wednesday.

In the meantime, Brussels will continue negotiations with Beijing in an attempt to secure a deal on minimum prices that can replace the tariffs. However, this solution, advocated by Germany, is highly complex and would be difficult to implement on the ground.

“By adopting these proportionate and targeted measures after a rigorous investigation, we’re standing up for fair market practices and for the European industrial base,” said Valdis Dombrovskis, the Commission’s executive vice president in charge of trade.

The entry into force was widely expected after the inconclusive vote earlier this month where member states failed to mount the necessary majority in favour or against the measures. The Commission invoked its trade powers to break the impasse and approve the duties, which come on top of the existing 10% rate and vary according to brand, as below.

• Tesla: 7.8%
• BYD: 17%
• Geely: 18.8%
• SAIC: 35.3%
• Other EV producers in China who cooperated in the investigation but have not been individually sampled: 20.7%
• Other EV producers in China who did not cooperate: 35.3%

The executive argues that additional tariffs are necessary to offset the effects of the subsidies it claims Beijing is injecting on a large scale across its domestic EV sector. The generous financial aid has allowed Chinese producers to sell their cars at artificially lower prices compared to their European competitors, the Commission attests.

As a result, Chinese firms’ EV sales in Europe have increased at extraordinary pace: their market share jumped from 1.9% in 2020 to 14.1% in the second quarter of 2024, according to the Commission’s estimations.

Brussels has repeatedly warned that, without taking forceful action, EU carmakers would suffer unsustainable losses and be pushed out of the lucrative market of net-zero mobility, leading to the closure of plants and the dismissal of thousands of workers.

The bloc’s automotive industry is already in turmoil due to high energy prices, sluggish consumer demand and intense global competition.

“There’s a clear and imminent threat to our car industry not making the transition to electric vehicles and being therefore wiped out,” a senior EU official said on Tuesday, speaking on condition of anonymity.

Despite the introduction of tariffs, Brussels claims it remains committed to finding a solution with Beijing enforceable by customs duties and compatible with World Trade Organization (WTO) rules, something that has so far proven elusive.

China denounced the Commission’s probe from the outset as a “naked protectionist act” consistently denying the existence of subsidies, describing the findings “artificially constructed and exaggerated,” and threatening retaliatory measures against the EU’s dairy, brandy and pork industries, setting alarm bells ringing in some capitals.

“We disagreed on each and every fact that we established in the investigation,” the senior EU official said. “It was a broad disagreement.”

But with the United States and Canada slapping 100% tariffs on Chinese EVs, Europe remains one of the few wealthy markets still available for Beijing’s high-end products.