Chinese Auto Tariffs, Hikes Coming. Germany Against EU, Italy and France In Favor
A few days after the announcement of the new European duties on Chinese electric cars, the first negotiations have already begun. Although not yet certain, the new duties, added to the previous 10%, could lead to increases of up to 48%. The European Commission is expected to give its actual green light to the measure today.
However yesterday, The German Automobile Manufacturers’ Association (VDA) had launched a final appeal to urge the EU to block the duties on the eve of their entry into forceor at least to mitigate the measures announced. According to the VDA, these duties would harm Western car manufacturers that export from China. Not to mention that the foreseeable increase in prices would jeopardize the European objective of achieving carbon neutrality by 2050 and trigger inevitable retaliation from Beijing, with counter duties that would hit cars produced in Europe, pork, dairy products and other agricultural products.
The German auto industry is thus playing its last card in an attempt to stop the impending trade war with China, an issue that divides the European Union countries in two. Germany, whose automakers made a third of their sales in China last year, is firmly opposed to the new tariffs. On the contrary, France and Italy are in favour of introducing duties. However, most member countries are still weighing the consequences of the move.
The issue will be put to EU Council members in a consultative vote in the coming weeks, representing the first official test of the European Commission’s support for a landmark measure. On 4 October 2023, the EU launched an investigation into subsidies that the Chinese government allegedly provides to domestic electric car manufacturers. At the end of the investigation, last June 12, the European executive established the introduction of individual duties on several Chinese producers: a tariff of 17.4% for BYD, 20% for Geely and 38.1% for SAIC. According to some rumors, these figures could be slightly lowered, with the highs falling from 38.1% to 37.6% and the lows from 20% to 19.9%. The provisional duties will be introduced as a safeguard and will be collected only if and when the definitive duties are imposed, expected in November.
Impact on European and US producers
The new tariffs will hit not only Chinese manufacturers but also some European and US cars made in China, such as those from Tesla, BMV and other Western automakers. Tesla, which exports Model 3 cars from Shanghai to Europe, was one of the companies the Commission decided to subject to a 21% tariff.. However, it could receive an individually calculated rate when the final duties are imposed in November. Considering the 10% tariff already in place, in extreme cases it could reach overall duties of 48%.
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