EU tariffs on Chinese EVs face backlash

Ministry of Commerce slams trade protectionist measures, advocates dialogue and consultation

China does not acknowledge or accept the European Union's final ruling to impose additional tariffs on electric vehicles manufactured in the Chinese market, the Ministry of Commerce said on Wednesday, vowing to take all necessary measures to protect the interests of companies.

The European Commission, the EU's executive arm, announced on Tuesday the conclusion of its anti-subsidy investigation, resulting in the imposition of definitive countervailing duties on EVs produced in China. The measures will expire at the end of a five-year period unless an expiration review is initiated before that date, the commission said in a news release.

In response, China has filed a complaint under the World Trade Organization's dispute settlement mechanism.

China has repeatedly pointed out that the EU's anti-subsidy investigation into EVs manufactured in China is irrational and fraught with numerous noncompliance issues, and is a protectionist move under the guise of "fair competition", the Ministry of Commerce said in an online statement.

Noting that the EU is still willing to continue talks on price commitments for Chinese-made EVs, the ministry said that China always advocates the resolution of trade disputes through dialogue and consultation.

The EU's new tariffs will range from 7.8 percent for the Chinese output of United States EV maker Tesla Inc, to 18.8 percent for Zhejiang Geely Holding Group, and up to 35.3 percent for Shanghai-based carmaker SAIC Motor Corp, in addition to the EU's existing 10 percent duty on imported cars.

Other Chinese EV manufacturers face an average tariff of 20.7 percent, with rates reaching up to 35.3 percent for those classified as "noncooperative".

SAIC Motor expressed disappointment on Wednesday with the decision and said that it plans to pursue necessary legal action by filing a lawsuit with the Court of Justice of the European Union to ensure its legitimate rights and interests.

The Chinese automaker said that it is implementing a series of measures to strengthen its resilience against the EU's trade barriers.

These tariffs on Chinese, European and US EV producers operating in China neither enhance the EU's resilience in EV manufacturing nor promote innovation or job creation. Instead, they represent a politically motivated approach, the Brussels-based China Chamber of Commerce to the EU said on Wednesday.

Market watchers warned that these additional tariffs will likely intensify trade friction between China and the EU, and may trigger a global rise in trade protectionism within the automotive industry.

Zhang Yongjun, secretary-general of the China Center for International Economic Exchanges in Beijing, said that based on the principle of reciprocity, the EU's decision will inevitably trigger countermeasures, potentially having an impact on competitive EU export industries that trade with China.

"Under such circumstances, European consumers may suffer, facing either increased costs for Chinese EVs or limited options from alternative suppliers," he added.

Wei Jianguo, former vice-minister of commerce, said that the EU's move could weaken Chinese investors' confidence in Europe, especially those in the automobile, power battery, industrial parts and logistics industries.

Erik Solheim, former executive director of the United Nations Environment Program, told China Daily on Wednesday: "Tariffs on superior Chinese electric cars go contrary to all economic wisdom. It will make us all poorer and slow down the green transformation in Europe.

"Green competition is a race to the top, tariffs and protectionism is a race to the bottom. Europe should invite investments from BYD and all the other Chinese car makers to help share technology and help shape competition so that European car makers can catch up."

Also on Wednesday, Foreign Minister Wang Yi reiterated China's opposition to the EU's tariff measure. The move clearly violates WTO rules and contradicts the principles of free trade, Wang said while meeting in Beijing with Finnish Foreign Minister Elina Valtonen.

China has always believed that openness leads to progress while protectionism has no future, and universally beneficial and inclusive economic globalization serves the interests of all parties, Wang added.

Believing that dialogue is the best path forward, Chen Huiqing, head of the legal service branch at the Beijing-based China Chamber of Commerce for Import and Export of Machinery and Electronic Products, said that talks remain the most effective way to prevent the escalation of bilateral economic and trade tensions.

Currently, technical teams from both sides are engaged in a new phase of consultations, according to the Ministry of Commerce.