Eight months after first announcing an anti-subsidy investigation, the European Union has finally imposed tariffs. The European Commission said on Wednesday it would impose tariffs of up to 38.1% on Chinese-made electric vehicles starting next month.
Reactions from Chinese state media were strong. Xinhua, the state-run Chinese news agency, called the decision a “misjudgment” and a “thin excuse for protectionism.” In another article, Xinhua said the EU’s “best-laid plan” was: [an] The key to “economic growth” is partnering with China.
Opinion articles Global Times, A journalist from state-run English-language media claimed Europe had “chosen to succumb to protectionism”.
Chinese officials also expressed their displeasure, with a Commerce Department official saying the EU tariffs were “contrary to the spirit of cooperation.”
Following the EU announcement, Chinese electric vehicle makers largely did not publicly criticize the decision. Chinese electric vehicle maker NIO said it opposed the EU’s decision but remained committed to the European electric vehicle market. Other Chinese brands, including BYD and Chery, have announced plans to produce cars in Europe that will not be subject to the tariffs.
Until now, Chinese electric vehicle makers such as BYD have refuted claims that their success is down to government support, blaming it on fierce domestic competition and internal efficiency.
Shares of major Chinese EV makers and startups appear unaffected by the ruling. In Hong Kong, BYD shares rose about 6% on Thursday. The Chinese EV giant is subject to lower EU tariffs than other Chinese companies. NIO shares rose 2%, while SAIC Motor, which is subject to the highest tariffs, fell 1.5%.
Research firm Rhodium argued in a report in late April that only tariffs of more than 50% would make the European market less attractive to Chinese EV makers.
Will China retaliate?
The tariffs do not have unanimous support in Europe, and the German Association of the Automotive Industry said the potential damage could outweigh the benefits.
Germany’s major auto brands still have large presences in the Chinese market and could be at risk of retaliatory tariffs: About a third of BMW, Volkswagen and Mercedes-Benz sales in the first quarter of 2024 were generated in China.
Other European products, including luxury goods, wine and agricultural products, could also be under threat of Chinese retaliation. China launched an anti-dumping investigation into French brandy in January, months after an EU anti-subsidy investigation into electric cars that analysts described as a potential “first bullet” in a trade war between Europe and China.
