The European Union, led by French President Emmanuel Macron, announced plans on Wednesday to impose substantial tariffs on electric vehicles (EVs) made in China. The decision, part of a broader trade conflict over Chinese government subsidies and increasing exports of green technology to the EU, has caused a considerable backlash in Berlin and Prague.
The EU Commission's investigation into Chinese EV subsidies revealed that China's battery electric vehicle sector benefits from what it called "unfair subsidisation", thus harming EU competitors. To address these concerns, the EU intends to introduce provisional tariffs of up to 38.1 percent on Chinese EV imports, in addition to the existing 10 percent duties on all imported EVs. This will affect key Chinese manufacturers, with BYD facing a 17.4 percent duty, Geely 20 percent, and state-owned SAIC 38.1 percent. If no resolution is reached with Chinese authorities, these tariffs will be implemented starting July 4.
The German car industry and government officials have voiced strong objections. Hildegard Müller, president of the German car industry association VDA, warned that the new tariffs could escalate into a global trade conflict. German Transport Minister Volker Wissing expressed concerns about the impact on German companies. Czech carmakers share similar issues, with Zdeněk Petzl of the Czech Automotive Industry Association cautioning against potential Chinese retaliation, which could disrupt the supply chain for EVs and batteries.
However, Czech Transport Minister Martin Kupka argued for the necessity of protecting EU industries from unfair practices, emphasizing the significant subsidies Chinese carmakers receive.
Chinese officials and state media have condemned the tariffs as western protectionism. Shares of BYD, partially owned by Warren Buffett’s Berkshire Hathaway, saw a rise after the EU announced lower-than-expected tariffs on the company. BYD's investment in an EV factory in Hungary is expected to mitigate the impact.
The higher tariffs are likely to favor larger Chinese companies, prompting further industry consolidation. The EU's measures are seen as a move to protect its manufacturers and green tech industries from what it views as unfair competition.