As anticipated, China and its massive network of EV OEMs are not pleased with the EU Commission’s recent decision to impose tariffs on Chinese-built vehicles. In retaliation, Chinese automakers have implored their government to increase tariffs on imported European cars.
Today’s automotive trade news is the latest jab thrown in an ongoing bout between China and Europe. Following an anti-subsidy probe that began last fall, the EU Commission determined that Chinese-built EVs have an unfair advantage in European markets.
Even before the commission shared the results of its probe, the EU was already threatening tariffs on Chinese imports, following the lead of the US, which recently upped tariffs to 100%. As China awaited the probe’s results, it threatened tariffs of its own against European automakers, vowing to implement upcharges up to 25% on gasoline vehicles imported into China.
EU automakers like BMW, Volkswagen Group, and Mercedes-Benz could be directly affected by tariffs in China. As a result, Germany has already publicly spoken out against tariffs on Chinese EVs in hopes both sides can reach a trade resolution before they take effect.
Meanwhile, despite the looming tariffs, Chinese EV automakers have expressed a steeled resolve to continue expanding into European markets. Locally, however, those same OEMs are requesting the Chinese government raise the proposed tariffs on EU automakers.
Chinese OEMs want higher tariffs on EU imports
According to the Chinese state-backed Global Times newspaper, local EV automakers have urged Beijing to hike its tariffs on combustion vehicles imported from Europe in retaliation for the EU Commission’s recent actions to deter Chinese-made EVs in markets overseas.
The report states that China’s Ministry of Commerce held a meeting in Beijing on Tuesday with big names in automotive, such as SAIC, BYD, BMW, Volkswagen, and Porsche. During the meeting, Chinese OEMs called on their government to “adopt firm countermeasures (and) suggested that positive consideration be given to raising the provisional tariff on gasoline cars with large-displacement engines.”
Top comment by Jilles van Gurp
Not unexpected. IMHO this just shrinks the export market for American and European vehicles globally. Because that's where the Chinese will now dump their cheap vehicles. And then of course they'll buy up factories in the EU and North America to produce locally as local manufacturers get squeezed harder. And of course they still need to buy a lot of parts from China (chips, batteries, etc.). So they lose their exports and have to pay more for parts.
That's why VW was against these tariffs.
Mercedes-Benz, Stellantis, and Renault were reportedly also present. The meeting appears to have been a rallying attempt to get EU automakers to help pressure the Commission in Brussels to at least ease tariffs, if not nix them altogether.
German automakers have a lot of skin in the game in markets on both sides of the world, and their attendance in Beijing proves that Europe’s automotive leader is, at the very least, trying to ease trade tensions.
Earlier today, the EU Commission acknowledged the retaliatory threat of Chinese tariffs and appeared open to negotiating, stating it is monitoring the situation “with a view to discussing if a mutually agreeable solution can be found.”
The EU’s tariffs on Chinese-made EVs are currently slated to take effect on July 4, 2024, so there’s still time for the two regions to reach a solution.
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