The European Union took the next step on Thursday to impose new tariffs on Chinese electric cars, requiring automakers to seek guarantees from banks that they would be able to pay the taxes, which are set to be finalized in October.
The move was expected. The bloc said on June 12 that it would impose additional tariffs of 17 to 38 percent on electric vehicles imported from China. A European Union investigation had found what officials in Brussels say were unfair subsidies from the Chinese government to electric car makers.
The Chinese government has denied that it is subsidizing the industry. Beijing claims that low prices for Chinese-made electric cars are instead due to strong competition and innovation.
The two sides began talks on June 22 to resolve the dispute. “We continue to work intensively with China on a mutually acceptable solution,” said Valdis Dombrovskis, EU Trade Commissioner.
The imposition of temporary tariffs requires car manufacturers to give European countries financial guarantees for eventual payment, although they are not yet required to transfer any money.
The interim tariffs vary significantly by automaker, based on the European Union’s estimates of the size of each Chinese manufacturer’s government subsidies. The highest tariffs will be imposed on manufacturers that reveal little about their subsidies, including a 37.6 percent tariff on SAIC Motor. Lower tariffs apply to BYD at 17.4 percent and Geely at 19.9 percent.
Automakers must guarantee that they will be able to make payments for vehicles arriving in the European Union from Friday for a period until October. However, the Union still needs to determine in the coming months whether the subsidies for Chinese cars have caused significant damage to the European car market.
There is concern among governments around the world that China is trying to export its way out of economic troubles as a crash in the real estate market has reduced the willingness of Chinese households to buy. In May, President Biden quadrupled the additional US tariffs on Chinese electric vehicles to 100 percent.
Turkey last month imposed additional 40 percent tariffs on gasoline-powered and hybrid gasoline-electric cars imported from China. Turkey had already imposed additional tariffs on China’s electric cars last year. Canada launched a trade investigation on Tuesday that could also lead to tariffs on electric cars from China.
Brazil is gradually increasing tariffs on electric cars imported from all countries starting this month, after a surge in imports from China earlier this year.
China has threatened retaliation against the European Union. The Commerce Department said on June 17 that it had opened an investigation into whether pork from the European Union was being dumped at unfairly low prices in China. The case could lead to tariffs on dozens of products, from pork chops to pickled pig intestines.
In January, the Commerce Department launched a trade investigation into imports of cognac and other European wine-based spirits, mostly from France. The French government was an early supporter of tariffs on electric cars from China.
China’s auto industry has suggested that the ministry impose tariffs on large gasoline-powered cars imported from the European Union if the bloc imposes tariffs on electric cars. China imposes a 40 percent sales tax on cars and sport utility vehicles with very large gasoline engines, almost all of which are imported from North America or Europe.
China also has a basic tariff of 15 percent on imported cars. In Europe there is a base tariff rate for cars of 10 percent and in the USA there is a tariff rate of 2.5 percent. The various tariffs currently being developed or introduced are in addition to these basic tariffs.
China is returning to the pattern it followed during its last major trade dispute with the European Union in 2013 over China’s shipments of low-priced solar panels to Europe. At that time, Beijing persuaded Germany to lead a coalition of EU member states that blocked tariffs on solar panels.
However, China may find it more difficult to stop tariffs on electric vehicles. Europe’s solar industry was decimated a decade ago after the union lifted its tariffs. Few in Europe want electric car production to suffer a similar fate.
The European Union has also tightened its rules for countries to lift tariffs. China would have to win a majority of member countries in a final vote in October, and those countries would have to represent at least 65 percent of the bloc’s population.
Member countries will also hold a preliminary vote in two weeks on whether to support the interim tariffs. However, the vote is not binding on the European Commission, the Union’s executive body.
Chinese automakers are starting to build factories in Europe to meet demand and avoid tariffs, following a strategy pioneered by Japanese automakers to circumvent trade restrictions in the United States. “It’s just like what Toyota did in the 1980s,” said John Zeng, an analyst at GlobalData Automotive.
But China is home to an abundance of car factories with the capacity to build twice as many cars as are sold in China, the world’s largest auto market.
The trade dispute has led to a split in the European automotive industry. German car manufacturers have spoken out against the tariffs. They are facing sharply declining sales in China as Chinese automakers have gained market share at their expense. Therefore, German automobile manufacturers are increasingly exporting from their factories in China, including to Europe.
But auto parts makers in Europe tend to favor imposing tariffs as major automakers like Volkswagen increasingly assemble cars from parts made by Chinese companies.
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2024-07-04 09:17:48
www.nytimes.com
