Volkswagen, Europe’s biggest carmaker, has warned that additional tariffs would do little to strengthen the European car industry.
The European Union (EU) has announced it will impose additional tariffs of up to 37.6% on Chinese-made electric vehicle (EV) imports, despite Beijing’s warnings that it would trigger a trade war.
The European Commission said on Thursday that the tariffs were imposed because of “unfair” state subsidies and would take effect on Friday.
However, there is a four-month period during which the tariffs will be temporarily applied, and negotiations between the two sides are expected to continue.
The EU’s executive arm, the Commission, launched an investigation last year into Chinese electric car manufacturers to determine whether state subsidies were unfairly driving down prices for European carmakers.
After four months, once the investigation is complete, the Commission can propose a “clear obligation” that would apply for five years and be voted on by the 27 member states.
The move would raise tariffs from the current 10% level as the trade dispute between the EU and China escalates, with a particular focus on green technologies.
The temporary tariffs, which range from 17.4% to 37.6%, will be imposed without retroactive effect and were aimed at stemming the surge in cheap electric cars built with state subsidies, European Commission President Ursula von der Leyen said.
The Chinese government has previously said it would take “all necessary measures” to protect the country’s interests, including retaliatory tariffs on Chinese exports of products such as cognac and pork.
The United States has already raised tariffs on Chinese electric vehicles to 100%, and Canada is considering similar measures.
“There are still four months left until the mediation, and we hope that the European and Chinese sides will move in the same direction, show good faith, and push forward the consultation process as soon as possible,” said He Yadong, a spokesperson for China’s Ministry of Commerce.
According to the EU, tariffs on Chinese manufacturers will be 17.4% for BYD, 19.9% for Geely and 37.6% for SAIC.
Companies including Tesla and BMW, Western carmakers that the EU considers to have cooperated with the anti-subsidy investigation, will face a 20.8% tariff, while those that have not will face a 37.6% tariff.
The commission estimates that Chinese brands’ share of the EU market has increased from less than 1% in 2019 to 8%, and could reach 15% by 2025.
It said the price was about 20 percent cheaper than models made in the EU.
Volkswagen, Europe’s biggest carmaker, has denounced the proposed tariffs and warned they would do little to strengthen Europe’s car industry in the long term.
“The negative impact of this decision outweighs any benefits for the European and German car industry in particular,” a Volkswagen spokesperson said in a statement.
