EU moves forward on Chinese EV duties, but with a slight downward shift

Brussels – The EU will push forward with tariffs against China’s electric cars, but to a slightly lesser extent. The European Commission corrected downward the duties announced on July 4 against battery-powered vehicles produced in the Asian country. The EU executive set additional costs of between 17 percent and 36.3 percent to the selling price of cars in Europe that would contribute to the Green Deal and the sustainability strategy so dear to the von der Leyen team.

Nothing changes apart from the amount of the duty, which is to be added to the 10 percent already in place and which, in any case, the EU still does not want to collect as long as it remains within the provisional nature of the trade defense instrument. There is time until the end of October to find an amicable solution with Beijing. Then, from the beginning of November, the duties will be introduced permanently (five years), and a trade war with the People’s Republic can begin.

“No final policy decision has been made,” stressed Olof Gill, spokesman for the Commission responsible for trade issues. “This is a technical and intermediate step” in the proceedings initiated to shed light on China’s production and competition policies.

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The Commission’s announcement is nothing more than procedural, an intermediate step in the process that started in October 2023, when President Ursula von der Leyen personally announced plans to nit-pick the Chinese model of battery car production. There is no going back; if anything, there are plans to move forward. The EU no longer sees a mere risk of damage to the European automotive sector but rather a possible  “significant damage very soon,” as soon as “in 2025,” they say in Brussels. Translated: due to Chinese public subsidies that benefit their industry, in Europe, factories could close and production could shrink and stop, generating an increase in unemployment.

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In this war of duties that so far has only been announced but is ready to begin if the EU and China do not find the solution that Brussels hopes for, Europe also hits the United States. Specifically the EU measures also affect Tesla, a US manufacturer and brand with a presence in the Asian country. The EU will grant Elon Musk’s group an individual duty of 9 percent, justified by tax breaks. Unlike Chinese manufacturers, Tesla does not benefit from direct government subsidies.

Interested parties have 10 days to provide comments. Until August 30, it will be possible to request hearings with the EU executive, and this also applies to the Chinese government, which was informed of the latest decisions made in Brussels. By October 30 at the latest, the Commission will have to publish in the Official Journal the text that makes the European duties against the Chinese electric car enforceable and final. That’s when the tariff war could start. The EU seems to be serious about it.