China urges EU to reverse ‘wrong direction’ on EV tariffs

Beijing hopes the European Union will reconsider tariffs on Chinese electric vehicles and stop going further in the “wrong direction” to shield its auto industry from competition, according to state news agency Xinhua.

The reaction from China and others embroiled in the dispute, including European and Chinese car makers as well as some industry groups, points to clear opposition to the EU decision and an eagerness to de-escalate the situation.

China said it would take measures to safeguard its interests after the European Commission announced on Wednesday it would impose extra duties of up to 38.1% on imported Chinese electric cars from July. That equates to billions of euros of extra costs for the carmakers, according to Reuters calculations based on 2023 EU trade data.

“In light of their economic structure and sheer size, China and the EU are best served by teaming up on major economic and trade issues,” Xinhua said in a commentary.

“It would be more cost-effective for the EU to draw on China’s advantages in order to develop its own EV industry.”

The EU move comes less than a month after Washington revealed plans to quadruple duties for Chinese EVs to 100%.

Brussels said it also would combat Chinese subsidies with additional tariffs ranging from 17.4% for BYD to 38.1% for SAIC, on top of the standard 10% car duty. That takes the highest overall rate to nearly 50%.

China’s auto industry, a mix of state-owned and private firms, has cost advantages over foreign competitors in part because of government subsidies and the nation’s dominance of battery-minerals refining.

The EU provisional duties are set to apply by July 4, with the investigation due to continue until November 2, when definitive duties, typically for five years, could be imposed.

Some Chinese EV makers and suppliers have started to invest in European production, which would avoid tariffs.