On July 4, 2024, the European Union (EU) announced significant tariffs on Chinese electric vehicles (EVs) to protect its auto industry. The new tariffs, ranging from 17.4% to 37.6%, come on top of an existing 10% duty, potentially making EVs less affordable for European consumers.

This move is a major setback for Beijing, which relies on the EU as its largest overseas market for EVs. The EU cited “unfair subsidization” as the reason behind the tariff increase, arguing that Chinese EVs benefited from state support, allowing them to be sold at much lower prices.

Chinese manufacturers, including major players like BYD and SAIC, now face tough decisions: absorb the costs or raise prices. Western firms manufacturing in China, like Tesla and BMW, are also affected, potentially facing tariffs up to 20.8%.

The tariffs are provisional for four months, pending further investigation. During this period, China and the EU are expected to continue negotiations, with Beijing threatening retaliation. Potential retaliatory measures could target European exports like cognac and pork.

For example, Patryk Krupcala, an architect from Poland, chose the affordable, high-performance China-made MG4. However, such choices might become less feasible as prices rise due to the tariffs.

The EU’s decision, while less severe than the US’s 100% tariffs, could have far-reaching consequences. Chinese EVs have grown from 0.4% of the EU market in 2019 to nearly 8% last year. If the trend continues, their market share could hit 20% by 2027.

The tariffs highlight the EU’s commitment to ensuring fair competition, but also risk escalating trade tensions and affecting the goal of carbon neutrality by 2050. As negotiations continue, both sides will seek a balance to avoid a full-blown trade war.-

-> Is India alert and prepared to catch the opportunity ?

• Local to Global Edition
  ~ By Karma Mark Start