The EU appears to be continuing with its plan to apply large tariffs on electric vehicles (EVs) coming from China, despite fears that this move could spark retaliation and lead to a trade war.
EU’s EV Tariffs Could Cause A Trade War With China
Valdis Dombrovskis, the vice-president of the European Commission, said:
We are not seeing the basis for retaliation as what we are conducting is indeed in line with WTO [World Trade Organization] rules.
However, he also confirmed that talks between EU officials and the Chinese authorities are still ongoing.
The tariffs on imported Chinese EVs have been provisionally set on a sliding scale that goes from 17.4% to 37.6%. These charges apply from Friday onwards, with officials in Beijing calling the tariffs unfair after earlier attempts to reach an agreement failed. Part of the reason for the tariffs is that EU investigations have suggested that the Chinese industry is receiving unfair government subsidies.
Whatever tariffs are eventually established will be added to the existing 10% duty charge on imported Chinese EVs. The total is still expected to be far less than the 100% tariffs that the US authority decided to apply.
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The expected influx of Chinese cars has caused concern among European vehicle manufacturers. Volkswagen (VWAGY) is the biggest car company in Europe and it has released statements suggesting that the proposed tariffs won’t be helpful for the continent’s car-making industry.
Volkswagen has been struggling with poor sales in China and this could be made worse if China decides to retaliate with its own high tariffs. With EV sales sluggish in Germany and the rest of Europe, Volkswagen fears a damaging trade war.
