EU imposes tariffs on Chinese electric cars

Additional EU tariffs on electric vehicle imports from China came into effect at midnight, despite resistance from Germany. The additional tax shall apply for five years. The European Commission adopted corresponding regulations on Tuesday.

Enough EU countries previously voted for punitive tariffs earlier this month. Germany voted against it out of concern about a major new trade conflict and possible retaliatory measures against German manufacturers. Q&A.

Why additional tariffs?

From the European Commission's perspective, countervailing duties are necessary to secure the long-term future of the EU automotive industry. An investigation has concluded that Chinese manufacturers benefit from unfair subsidies that give them a significant advantage in the European market. As a result, Chinese electric cars are typically about 20% cheaper than EU-made models. The European Commission had imposed provisional countervailing duties in July.

Negotiations over a possible amicable solution to the trade dispute remained unsuccessful until the end. One option is for EV dealers to make price commitments and thereby avoid tariffs. The European Commission said that on a technical level, negotiations were continuing even after the decision in favor of compensatory charges.

How high are the tariffs?

According to regulations, electric vehicles produced by BYD will be subject to a 17.0% surtax in the future. For electric vehicles produced by the Geely manufacturer, the tax rate is 18.8%. The highest tax rate is 35.3%. The European Commission said company-specific tariff rates are determined based on studies it conducts and are intended to reflect a company's specific situation. These tariffs are on top of the existing 10 percent tariff.

What are the Germans worried about?

The trade dispute is a big problem for German industry as China is the world's largest car market and companies fear losing one of their most important sales markets. German companies such as Volkswagen, Mercedes and BMW not only produce cars specifically for the Chinese market, but also for export.

German companies such as Volkswagen, Mercedes and BMW not only produce cars specifically for the Chinese market, but also for export.Image: trapezoid

The Automobile Industry Association warned that tariffs would not only increase the risk of mutual trade conflicts but also make cars more expensive for consumers. In addition, a spokesman for the German news agency said that the expansion of electric vehicles and the achievement of climate goals will slow down at a “particularly critical stage”.

ADAC is also concerned that China's backlash will negatively impact consumers. “For the development of electric vehicles, it is very important to offer a wide range of products on the automotive market, regardless of their origin. On the other hand, punitive tariffs may cause certain models to disappear from the market.” A spokesman for the German Information Ministry said.

In Brussels, on the other hand, there is an assessment that the position is dominated by the top managers of car manufacturers. They have been accused of wanting to achieve good results, especially in the short and medium term, without paying much attention to the long-term survival of the auto industry.

What consequences will China bring?

It's unclear how China will react to the eventual imposition of tariffs. The government in Beijing accuses the EU of protectionism and has threatened to impose higher tariffs on large-displacement internal combustion engines imported from the EU to the People's Republic of China. German carmakers will be particularly affected by this.

China has also begun considering imposing tariffs on pork and dairy imports as possible retaliation. An investigation into the spirits, which mainly affects French producers, has led to initial measures. Companies importing to China must pay a deposit of 30.6% to 39% of the value of the goods to Chinese customs.

What do Chinese automakers have to fear?

Additional tariffs affect not only Chinese brands such as BYD or Geely, but also German manufacturers. The measure does not target Chinese electric cars specifically, but cars made in China. German companies such as Volkswagen, Mercedes and BMW not only produce cars specifically for the Chinese market, but also for export. Manufacturers do not support the tariffs and fear retaliatory measures from China. (Sudan Development Authority/Africa Working Group/Department of Political Affairs)

Since Udo Lindenberg used the word “Oberindianer” in a 1983 song, the lyrics of the song were adapted for a performance at Berlin's famous Humboldt Forum. This prompted criticism.

On the occasion of the musical event of the Humboldt Forum Choir, a famous cultural institution in Berlin, a slight adaptation of Udo Lindenberg's song “Train to Pankow” was performed. In the 1983 song, the German rocker sang about “upper class Indians.” Referring to Erich Honecker, the then head of state of East Germany.