European Union will tax Chinese electric vehicles by up to 45%

EU imposes tariffs of up to 45% on Chinese electric vehicles, threatening trade conflict

A European Union approved this Friday (4) the imposition of tariffs of up to 45% on electric vehicles from China, in a move that could provoke a wider trade confrontation with Beijing. THE Chinain turn, has already threatened to retaliate, promising to protect its companies and impose tariffs on European sectors, such as dairy, brandy, pork and automobiles.

The decision of the European Commissionthe executive arm of the EU, was taken after an investigation that showed that the China was unfairly subsidizing its electric vehicle industry. Beijing denies the accusations and prepares his own responses.

Rates will last for five yearsand, in the vote, 10 member states of the EU supported the measure, while Germany and four more countries voted against. Others 12 abstainedaccording to sources close to the vote.

As shares of European car manufacturers rose after the decision. This increase was driven by relief in the automotive sector, which had been suffering declines in recent weeks due to profit warnings from major manufacturers such as Stellantis NV, Mercedes-Benz Group AG e BMW AG. Still, the European automotive sector index, Stoxx 600continues to fall by more than 10% no year.

A UE is trying to reduce its dependence on Chinaa measure seen as essential to protect their industries and avoid economic coercion from Beijing. Mario Draghiformer president of European Central Bankrecently warned that Chinese state-sponsored competition posed a threat to the European Union.

In response to the investigation by European Commissionas negotiations between the EU and the China will continue, looking for an alternative to tariffs. Both parties discuss the creation of a mechanism to control prices and export volumes as a solution.

A European Commission stated that there is still room to find a solution that is “fully compatible with the rules of the OMC” and can deal with the harmful subsidies that the investigation revealed. At the same time, the Chinese Ministry of Commerce acknowledged the EU’s willingness to continue negotiations, but warned that tariffs could “damage the confidence of Chinese companies investing in Europe”.

As Chinese electric vehicle manufacturers they now face the difficult decision of absorbing the tariffs or raising prices. This occurs at a delicate time, as domestic demand in China is falling, putting pressure on its profit margins.

With tariffs in place, some Chinese manufacturers are considering invest in factories in Europe to avoid tariff barriers. Among them, the Geely Holding Group Co.which controls the Volvo ea Lotuscriticized the decision of the UEcalling it “harmful to commercial relations between the Europa ea China“.

As additional fees have already begun to affect sales of Chinese electric vehicles in Europe, which have fallen 48% in Augustreaching the lowest level in 18 months. Although Europe is a desirable market for Chinese manufacturers, Kevin Lauanalyst at Daiwa Securitiesbelieves that the impact will be limited, as the region represents only a small fraction of these companies’ total sales.

Meanwhile, European carmakers such as Volkswagencriticized the measure, stating that tariffs are “the wrong approach” and will not solve competitiveness challenges. The company also appealed to the UE and the Chinese government continue negotiations.

A voting also exposed divisions within the UEwith many countries showing discomfort with a possible trade war. Hildegard Müllerpresident of the German automotive lobby VDApraised the German government’s stance in voting against the tariffs, citing the risks to the German economy and automotive industry. Germany.

The fear of retaliation from the China especially concerns German automakers, such as Mercedes, BMW e Volkswagenwhich depend heavily on the Chinese market. In 2023, the China it represented about a third of these companies’ global sales.

The unfolding tariffs could have significant implications for both the global auto industry and trade relations between Europa e Chinacom Beijing threatening measures that could affect a range of European sectors.