EU Imposes Up To 45% Tariff On Chinese-Made EVs Amid Rising "Economic Cold War" Risks
Bloomberg has revealed that EU member states have decided to impose tariffs of up to 45% on electric vehicles made in China. This decision comes despite warnings from some members that this could potentially instigate an "economic cold war" with Beijing.
European Commission's Anti-Subsidy Investigation
The European Commission, the executive arm of the bloc, recently finished its anti-subsidy investigation into Chinese imports of battery electric vehicles. The results of this investigation have led the Commission to implement the tariffs, which are set to last for five years.
According to sources familiar with the voting process, ten member states were in favor of the duties. Germany and four other countries voted against the tariffs, while 12, including Spain, abstained.
New Duty Rate
The newly imposed duty rate could reach up to 35% for foreign EV manufacturers exporting from China. Given the existing 10% duty, the rate for some foreign EVs imported into the bloc could rise to as much as 45%.
The Commission made the following statement:
"Today, the European Commission's proposal to impose definitive countervailing duties on imports of battery electric vehicles (BEVs) from China has obtained the necessary support from EU Member States for the adoption of tariffs. This represents another step towards the conclusion of the Commission's anti-subsidy investigation."
The EU and China are still working towards finding an alternative solution that would be compatible with the World Trade Organization (WTO), address the injurious subsidization established by the Commission's investigation, and be monitorable and enforceable.
A Commission Implementing Regulation, including the definitive findings in the investigation, must be published in the Official Journal by 30 October 2024, at the latest.
Anti-Subsidy Investigation
The duties are part of an anti-subsidy investigation initiated by the Commission earlier this year. Approximately 100 firms were investigated, with the main finding being market-distorting subsidies across China's entire EV supply chain.
Meanwhile, the bloc has been actively promoting far-left climate change policies to de-growth its economy. The entire bloc is in a precarious situation, with threats of recession looming from Germany as its automotive manufacturing industry stalls.
Mario Draghi, the former President of the European Central Bank, warned last month that "China's state-sponsored competition" posed a threat to member states. Last year, the EU traded 739 billion euros ($815 billion) with China.
Viktor Orban, the Hungarian Prime Minister, has previously stated that the EU tariffs on China could ignite an "economic cold war".
European car manufacturers, including Mercedes-Benz, Stellantis, BMW, and Volkswagen, all have a significant presence in China that could be at risk if Beijing retaliates.
Interestingly, many far-left Western leaders, including many in the US, have criticized Trump's tariff plans against China as 'terrible'. This seems to be a case of hypocrisy at its best.
Bottom Line
The decision by the EU to impose tariffs on Chinese-made EVs is a significant move that could have far-reaching implications. With the potential for an "economic cold war" and the risk to European car manufacturers operating in China, the situation is fraught with uncertainty. What are your thoughts on this development? Do you think the EU's decision was justified, or could it lead to further economic instability? Share your thoughts and this article with your friends. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.
