Import tariffs by the European Union on China-made electric vehicles are expected to be formalized as early as Wednesday (June 12) this week. The to-be-announced taxes will also affect other Chinese imports.
As per The Guardian, although many predict Beijing will strike with countermeasures that could affect a range of EU exports to the nation, including dairy products and cognac, Chinese firms are already preparing for additional import duties.
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Ursula von der Leyen, the chairwoman of the European Commission, cautioned that the world could not absorb China's excess production after meeting with Xi Jinping, the president of China, in Paris last month. She added that the EU will not waver from defending its sectors and jobs within the unit.
The anti-subsidy probe was started in October of last year because of allegations that China was suppressing domestic consumer demand via overcapacity and flooding the EU with cheaper EVs.
It is one of the more than a dozen investigations into Chinese state assistance that the EU is conducting. Other investigations include one into the export of solar panels, heat pumps, and wind turbines, which the energy industry claims are 50% less expensive than what the EU charges.
Beijing's Expected Response
Experts predict that since the electric car industry fuels China's export success, Beijing would view the taxes as a show of strength.
They forecast that Xi, viewing trade as a battlefield where he can determine the terms, will not budge from the national wager he made to control the green tech sector globally through EVs, solar panels, and electric vehicle batteries.
In the unlikely event that the EU probe concludes on Wednesday that Chinese automakers have gained a competitive edge, Beijing will be issued a formal pre-notification of tariffs and given four weeks to present any information that refutes the European position.
In November, some 13 months after the investigation began, member states must support any decision to impose tariffs permanently.
If implemented, the tariff schedule would consist of three tiers: individual rates for the sample of businesses the EU was investigating, which included BYD, the largest EV seller in the world; an average tariff for businesses that complied with inquiries but were not thoroughly investigated; and a residual tariff for businesses that weren't investigated at all.
US Tariffs on Chinese EVs
The EU's expected import tariffs come just a month after US President Joe Biden announced that China-made electric vehicles and goods will be subject to a new set of tariffs, quadrupling the Chinese EV tariff from 25% to 100%.
Despite Beijing's threat of retaliation, Biden argued that the higher levies were a fair response to China's excess capacity in the electric vehicle market. According to sources, China can only sell 22 to 23 million EVs domestically despite producing 30 million of them annually.
Because Donald Trump's tariffs during his presidency almost prevented Chinese electric vehicles from entering the US, Biden's car tariffs are merely symbolic.
However, lobby organizations have cautioned against a possible hazard as Beijing turns to exports to counterbalance its weak economy.
If Chinese cars were to enter the US market, the Alliance for American Manufacturing said, US manufacturers would suffer "extinction-level events."
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