The European Commission recently announced plans to impose additional tariffs of up to 38.1 percent on electric vehicles (EVs) imported from China. Aimed at safeguarding European industries and jobs, these tariffs are set to impact leading Chinese EV manufacturers such as BYD, Geely, and SAIC, with respective tariffs of 17.4 percent, 20 percent, and 38.1 percent. Other companies cooperating with the investigation may face a tariff of 21 percent, while non-cooperating firms could see duties as high as 38.1 percent.
Currently, the European Union (EU) charges a 10 percent levy on all car imports. The proposed tariffs, expected to take effect by July, could further strain the already tense trade relations between China and the EU. As one of the world’s most outward-oriented economies and largest single market, the EU stands to face significant economic repercussions from this move.
China, the world’s largest automobile market, plays a crucial role in the global EV industry. The EU’s decision to raise tariffs not only exacerbates challenges within its own EV sector—already grappling with declining domestic demand—but also threatens to impede bilateral trade. A study by the Kiel Institute for the World Economy indicates that a 20 percent tariff on Chinese EVs could result in a $3.8 billion decrease in EU EV imports, representing nearly 25 percent of the current trade value.
Trade and investment have long been the cornerstone of China-EU relations, fostering growth and job creation across both regions. Together, China and the EU account for over a third of global GDP, with annual goods trade exceeding $800 billion. While telecommunications equipment is China’s leading export to the EU, automobiles stand as the bloc’s top export to China. For European automotive enterprises, access to China’s competitive and expansive EV market is not only lucrative but also essential for fostering innovation and improving product quality through healthy competition.
The EU’s protectionist measures, mirroring recent actions by other nations, may ultimately undermine its own interests. While the intent is to protect domestic industries and jobs, such tariffs could erode the competitiveness of European EV manufacturers on the global stage in the long run. Rather than isolating itself, the EU might benefit more from embracing open trade policies that encourage collaboration and mutual growth within the global EV market.
Reference(s):
cgtn.com
