European Union slaps tariffs on Chinese electric vehicles, risking Beijing backlash

Tariffs on Chinese EVs: European Union has decided to increase tariffs on Chinese-built electric vehicles to as much as 45.3 per cent at end of its highest profile trade investigation that has divided Europe and prompted retaliation from Beijing.

Just over a year after launching its anti-subsidy probe, European Commission will set out extra tariffs ranging from 7.8 per cent for Tesla to 35.3 per cent for China's SAIC, on top of EU's standard 10 per cent car import duty.

extra tariffs were formally approved and published in EU's Official Journal on Tuesday, meaning y will take effect on Wednesday.

Commission, which oversees EU trade policy, has said tariffs are required to counter what it says are unfair subsidies including preferential financing and grants as well as land, batteries and raw materials at below market prices.

It says China's spare production capacity of 3 million EVs per year is twice size of EU market. Given 100 per cent tariffs in United States and Canada, most obvious outlet for those EVs is Europe.

"China does t agree with or accept ruling," China's commerce ministry said on Wednesday in a statement.

"We also ticed that EU side indicated it would continue to negotiate with China on price commitments," ministry said, adding that Beijing hoped to find a "solution acceptable to both sides as soon as possible to avoid escalating trade friction."

China Chamber of Commerce to EU said it was profoundly disappointed by "protectionist" and "arbitrary" EU measure and was disheartened by lack of substantial progress in negotiations to find an alternative to tariffs.

Beijing launched its own probes this year into imports of EU brandy, dairy and pork products in apparent retaliation.

It has also challenged EU's provisional measures at World Trade Organisation.

European automakers are grappling with an influx of lower-cost EVs from Chinese rivals. Commission estimates Chinese brands' share of EU market has risen to 8 per cent from below 1 per cent in 2019 and could reach 15 per cent in 2025. It says prices are typically 20 per cent below those of EU-made models.

EU's stance towards Beijing has hardened in last five years. It views China as a potential partner in some areas, but also as a competitor and a systemic rival, but EU members are t united on EV tariffs.

Germany, EU's biggest ecomy and major car producer, opposed tariffs in a vote this month in which 10 EU members backed m, five voted against and 12 abstained.

Germany's ecomy ministry said on Tuesday that Berlin supported ongoing EU negotiations with China and hoped for a diplomatic resolution to mitigate trade tensions while protecting EU industry.

" Federal Government stands for open markets. Because Germany in particular, as a globally interconnected ecomy, is dependent on this," spokesperson added.

German carmakers have heavily criticised EU measures, aware that possible higher Chinese import duties on large-engined gasoline vehicles would hit m hardest.

measures come as thousands of German industrial workers, including at carmakers, strike for higher ws, with Volkswn possibly about to anunce shutting plants on home soil for first time in its 87-year history.

Hungarian Prime Minister Viktor Orban said EU was headed for an "ecomic cold war" with China.

However, France's PFA car association has welcomed duties, adding it backed free trade as long as it was fair.

Commission has held eight rounds of technical negotiations with China to find an alternative to tariffs and said talks can continue after tariffs are imposed.

two sides are looking at possible minimum price commitments for imported cars and agreed on Friday to hold a furr round, although Commission said re were "significant remaining gaps".

It remains to be seen what impact tariffs will have on consumer prices. Some producers may be able to absorb m at least partially.

In first nine months of 2024, China's EV exports to EU were down 7 per cent from a year earlier, but y have surged by more than a third in August and September, ahead of tariffs, data from China Passenger Car Association show.