By Philip Blenkinsop
BRUSSELS (Reuters) – The European Union has decided to increase tariffs on Chinese-built electric vehicles to as much as 45.3% at the end of its highest profile trade investigation that has divided Europe and prompted retaliation from Beijing.
Just over a year after launching its anti-subsidy probe, the European Commission will set out extra tariffs ranging from 7.8% for Tesla to 35.3% for China’s SAIC, on top of the EU’s standard 10% car import duty.
The extra tariffs were formally approved and published in the EU’s Official Journal on Tuesday, meaning they will take effect on Wednesday.
The Commission, which oversees EU trade policy, has said tariffs are required to counter what it says are unfair subsidies including preferential financing and grants as well as land, batteries and raw materials at below market prices.
It says China’s spare production capacity of 3 million EVs per year is twice the size of the EU market. Given 100% tariffs in the United States and Canada, the most obvious outlet for those EVs is Europe.
“China does not agree with or accept the ruling,” China’s commerce ministry said on Wednesday in a statement.
“We also noticed that the EU side indicated it would continue to negotiate with China on price commitments,” the ministry said, adding that Beijing hoped to find a “solution acceptable to both sides as soon as possible to avoid escalating trade friction.”
The China Chamber of Commerce to the EU said it was profoundly disappointed by the “protectionist” and “arbitrary” EU measure and was disheartened by the lack of substantial progress in negotiations to find an alternative to tariffs.
Beijing launched its own probes this year into imports of EU brandy, dairy and pork products in apparent retaliation.
It has also challenged the EU’s provisional measures at the World Trade Organization.
European automakers are grappling with an influx of lower-cost EVs from Chinese rivals. The Commission estimates Chinese brands’ share of the EU market has risen to 8% from below 1% in 2019 and could reach 15% in 2025. It says prices are typically 20% below those of EU-made models.
The EU’s stance towards Beijing has hardened in the last five years. It views China as a potential partner in some areas, but also as a competitor and a systemic rival, but EU members are not united on EV tariffs.
Germany, the EU’s biggest economy and major car producer, opposed tariffs in a vote this month in which 10 EU members backed them, five voted against and 12 abstained.
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