The European Commission announced today that it will impose tariffs of up to 38% on Chinese EV imports. These tariffs are expected to draw strong criticism from China. The Commission stated that the tariffs will likely be imposed starting next month. Following the news, Chinese EV stocks, including Li Auto (NASDAQ:LI), NIO (NYSE:NIO), and XPeng (NYSE:XPEV), were trading lower in pre-market trading.
Details of the EU’s New Tariffs on Chinese EVs
The EU will impose tariffs of 17.4% for BYD (OTC:BYDDY), 20% for Geely (OTC:GELYF), and 38.1% for SAIC Motor Corp. Other Chinese EV makers will attract a weighted average import duty of 21%. The Commission noted that all other Chinese manufacturers who did not cooperate with the EU’s investigation would be subject to a tariff of 38.1%.
Furthermore, the Commission noted that Tesla (NASDAQ:TSLA), which manufactures EVs in China, “may receive an individually calculated duty rate at the definitive stage.” Interestingly, the EU already imposes tariffs of 10% on Chinese EVs, and these new tariffs will be in addition to the existing import duties.
Why Is the EU Imposing Tariffs on Chinese EV Imports?
These import duties follow an investigation by the EU that started last year to determine whether Chinese EV manufacturers benefit from import subsidies in the European Union. The European Commission stated today that the EV “value chain in China benefits from unfair subsidization, which is causing a threat of economic injury to EU BEV [battery-operated electric vehicles] producers.”
Some EU Countries Have Opposed the Tariffs
According to a Financial Times report, Germany, Sweden, and Hungary have opposed the tariffs, fearing Chinese retaliation. China currently imposes 15% tariffs on European EVs in China. The report states that China is the EU’s largest trading partner and exported €10 billion worth of electric cars to the EU last year, doubling its market share to 8%, citing data from Rhodium Group.
The increased tariffs from the EU will likely increase the cost of these Chinese EV imports substantially for its customers in this bloc.
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