Brussels announced, this Wednesday, June 12, up to 38% additional customs duties on imports of Chinese electric vehicles into the EU, while seeking to avoid a trade war with Beijing accused of having illegally favored its manufacturers.
Germany, very involved in China, fought with Sweden and Hungary to avoid sanctions, fearing reprisals. France and Spain, on the contrary, pushed for targeted and proportionate measures.
Beijing immediately denounced “purely protectionist behavior” by Europeans, via a press release from the Ministry of Commerce. China warns that it will “take all measures to firmly defend its legitimate rights.”
Vehicles manufactured in Chinese factories were until now taxed at 10% in the EU. Brussels plans to add countervailing duties of 17.4% to Chinese manufacturer BYD, 20% to Geely and 38.1% to SAIC, after nearly nine months of investigation. For other manufacturers, an average duty of 21% should apply. Its amount will differ depending on the levels of public subsidies received.
Trade war
These provisional rates were communicated to the various companies concerned and to the Chinese authorities to “study ways of resolving the problems identified”, explained the Commission in a press release. “If discussions with the Chinese authorities did not result in an effective solution, these provisional countervailing duties would be introduced from July 4” but they “would only be collected if definitive duties are imposed,” she said. . Brussels will have four months, after the institution of provisional duties, to impose definitive duties, which opens a window for dialogue until November.
“It is good that the European Commission is now proposing these discussions to the Chinese side (…) it would be very desirable to be able to reach a consensual solution,” reacted the spokesperson for the German government, Steffen Hebestreit. From Mercedes to Ferrari, Europe is the cradle of prestigious automobile brands. Champion of gasoline and diesel engines, it nevertheless fears seeing its factories disappear if it fails to stem the announced surge of Chinese models which have a head start in electrics.
Concern among German manufacturers
This exchange of arms is part of a broader context of commercial tensions between the West, with Washington in the lead, and the Asian giant, which is also accused of destroying competition in several other sectors such as wind turbines, solar panels or even The batteries.
In the United States, President Joe Biden announced on May 14 an increase in customs duties on Chinese electric vehicles to 100%, compared to 25% previously, transforming the American market into a fortress where the national champion Tesla reigns supreme.
A week later, Ursula von der Leyen stressed that the European response would be “more targeted” with a tax corresponding “to the level of damage” suffered. Enough to slow down imports of Chinese electric vehicles without completely blocking them. The EU claims to comply with the rules of the World Trade Organization (WTO). It thus hopes to protect a sector which employs 14.6 million employees in the EU while avoiding a deadly conflict with its second economic partner behind the United States.
Beijing already announced in January an investigation targeting all wine spirits imported from the European Union, including cognac. Wine, dairy products, pork and large-engine cars are also in the sights, according to the Chinese state press. “We reiterate our deepest concern,” Florent Morillon, president of the Bureau National Interprofessionnel du Cognac, declared on Wednesday. There is also concern among German car manufacturers Audi, BMW, Mercedes and Volkswagen, which generate nearly 40% of their global sales in China. “The damage from the measures announced today could be greater than their potential benefits for the European automobile industry,” reacted the president of the German automobile manufacturers’ federation (VDA), Hildegard Müller.
Reactions are more positive in Paris. “Only maintaining a level playing field can guarantee free competition,” underlined Luc Chatel, president of the Automobile Platform (PFA) which represents the French industry. Renault, Peugeot and Citroën are almost absent from the world’s largest market.
China overtook Japan as the top auto exporter last year. It invested very early in batteries, the technological heart of electric vehicles, which it has made its specialty. In Europe, Chinese brands are growing quickly thanks to competitive prices. They went from less than 2% of the electric car market at the end of 2021 to almost 8% at the end of 2023, according to the Jato institute, taking advantage of the ban on sales of gasoline and diesel engines decided by the EU. horizon 2035 to fight against global warming.