Brussels argues that tariffs of up to 45% are necessary to counteract what it calls Beijing’s “harmful” subsidies.
The tariffs, which took effect on Wednesday and will remain in place for five years, follow the EU’s dismissal of China’s accusations that it imposed protectionist measures without evidence of “undue state support” for Chinese vehicles.
These new tariffs add to the EU’s existing 10% tariff on car imports from China. Both sides indicated they would continue discussions, potentially introducing a “minimum price” for Chinese-made cars sold in Europe.
An EU official told the Financial Times (FT) that this minimum price level should be high enough to offset the “damaging subsidies” Chinese manufacturers receive, which allow them to undercut their European competitors.
China’s Ministry of Commerce said on Wednesday that Beijing would “continue to take all necessary measures to resolutely safeguard the legitimate rights and interests of Chinese enterprises.” The ministry also expressed hope that Brussels could work “constructively” with Beijing to resolve the dispute through dialogue.
The EU’s decision to impose additional tariffs on Chinese-made electric vehicles follows a months-long investigation initiated last year by European Commission President Ursula von der Leyen into alleged unfair support for China’s electric vehicle industry.
Beijing has repeatedly criticized Brussels for the investigation and tariff hikes, arguing that Europe’s actions violate international trade rules and jeopardize global progress in combating climate change.
The tariffs have sparked significant division within the EU, with strong opposition from member states including Germany and Hungary. Diplomats warn that EU countries exporting to China are preparing for potential retaliatory measures from Beijing. This move also comes at a sensitive time for the EU car industry, which is already struggling to compete with the growing presence of low-cost Chinese electric vehicles in the bloc.
All major European carmakers, except Renault, have issued profit warnings this year. Volkswagen, Europe’s largest carmaker, plans to close at least three German plants and cut thousands of jobs as part of a cost-reduction strategy.
In addition to high energy costs and strict regulations tied to the EU’s green transition, the industry is grappling with a sharp increase in more affordable Chinese models entering the market.
The Commission emphasized that the tariffs were introduced to ensure a “level playing field” in Europe, rather than to restrict trade with China. The tariffs, first announced in June, vary from 7.8% for Tesla to 35.3% for SAIC, depending on the subsidies each company received from Beijing. China’s BYD and Geely are also affected.
Other manufacturers that cooperate with Brussels by providing required information will face a tariff of 20.7%, while those who do not cooperate will be subject to a 35.3% duty.
“We can safely say that we fundamentally disagree with every single fact and every single legal argument put forward in the investigation,” an EU official stated.
China has announced it will impose anti-dumping measures on EU spirits imports and has launched investigations into EU pork and dairy imports in response to the EV tariffs.
Beijing also filed a complaint with the World Trade Organization (WTO) following the preliminary tariff announcement, labeling the investigation as “protectionist” and alleging a lack of “concrete evidence” of subsidies in China.
The EU responded that the WTO complaint was now moot, as the tariffs were slightly reduced following the investigation. The Chinese Chamber of Commerce in the EU told the Financial Times it was “deeply disappointed” by the Commission’s decision to uphold tariffs, stating that it was “disheartening that no significant progress has been made in negotiations.”
However, an EU official noted that prices for consumers might not rise immediately: “If a consumer buys a car now, there’s a very good chance they’ll buy it from stock already available in the EU market,” the official said.
