China-built EVs hit with duties in biggest EU trade case yet

BRUSSELS (Reuters) – The European Union will impose tariffs of up to 37.6% from Friday on imports of electric vehicles made in China, EU officials said on Thursday, ratcheting up trade tension with Beijing.

There is however a four-month window during which the tariffs are only provisional and intensive talks are expected to continue between the two sides.

The European Commission’s provisional duties of between 17.4% and 37.6% without backdating are designed to prevent what its president Ursula von der Leyen has said is a threatened flood of cheap EVs built state subsidies.

The rates are almost exactly the same as those announced by the Commission on June 12. The executive made slight adjustments after companies identified minor calculation errors in the initial disclosure.

Beijing said then it would take “all necessary measures” to safeguard China’s interests.

These could include retaliatory tariffs on exports to China of products such as cognac or pork.

The EU anti-subsidy investigation has nearly four more months to run.

At the end of it, the Commission, the EU’s executive arm, could propose “definite duties”, typically applying for five years, on which EU members would vote.

China’s commerce ministry said on Thursday both sides have so far held several rounds of technical talks over tariffs on the issue.

“There is still a four-month window before arbitration, and we hope that the European and Chinese sides will move in the same direction, show sincerity, and push forward with the consultation process as soon as possible,” He Yadong, a ministry spokesperson, said.

BYD (SZ:) will face duties of 17.4%, Geely 19.9% and SAIC 37.6%, the EU said on Thursday. These are on top of the EU’s standard 10% duty on car imports.

Companies deemed by the EU to have cooperated with the anti-subsidy investigation, including western carmakers Tesla (NASDAQ:) and BMW (ETR:), will be subject to 20.8% tariffs and those that did not cooperate a rate of 37.6%.

The Commission has estimated Chinese brands’ share of the EU market has risen to 8% from below 1% in 2019 and could reach 15% in 2025. It says prices are typically 20% below those of EU-made models.

European policymakers are keen to avoid a repeat of what happened with solar panels a decade ago, when the EU took only limited action to curb Chinese imports and many European manufacturers collapsed. The EU launched its anti-subsidy investigation into Chinese EVs last October.

The Chinese Passenger Car Association has said the tariffs will have only a modest impact on the majority of Chinese firms.

The rates are far lower than the 100% tariff Washington plans to apply to Chinese EV imports from August.