Why Europe's Carmakers Are Against EU Tariffs on Chinese Electric Cars - Latest Global News

Why Europe’s Carmakers Are Against EU Tariffs on Chinese Electric Cars

  • The EU is about to announce tariffs on electric vehicles made in China this week.
  • European car manufacturers such as BMW, Volkswagen and Mercedes rejected this move.
  • The reason for this is that they fear retaliation from Beijing that would damage their sales.

The European Union will finalise its plans to combat cheap Chinese electric cars this week. Like the US, the EU has raised concerns about how China is able to set prices for electric cars, suggesting that excessive subsidies have allowed cars to be offered at artificially low prices.

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This move follows similar measures from the US, where the White House quadrupled tariffs on Chinese electric vehicles last month, from 25 percent to 100 percent. Although European leaders have expressed concern about the impact the influx of cheap Chinese electric vehicles could have on the local industry, there is no support for the tariffs from European automakers.

Read: China could impose additional tariffs on imported cars

European carmakers are heavily dependent on Chinese sales and risk retaliation from Beijing. China’s Chamber of Commerce with the EU has already warned that the country is considering raising tariffs on imported cars if EU tariffs are increased.

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In addition, China is a key manufacturing base for many European car manufacturers. Cars such as the BMW iX3, Citroen C5 X and Dacia Spring are all examples of European cars made in China that could be affected by the planned tariffs.

    Why Europe's carmakers are against EU tariffs on Chinese electric cars

The BMW iX3 is manufactured in China and imported to Europe

HSBC estimates that German carmakers make 20 to 23 percent of their profits from selling Chinese vehicles, and executives at BMW, Mercedes and Volkswagen have all warned against imposing tariffs.

BMW boss Oliver Zipse told investors he did not believe the industry needed protectionism. Trade wars could “very quickly shoot you in the foot.” VW boss Oliver Blume was similarly skeptical about tariffs, saying the risk of retaliation was “potentially dangerous.” And Stellantis boss Carlos Tavares described the possible tariffs on Chinese electric cars as “a big trap for countries that go down this path.”

However, the EU’s measures are unlikely to be as drastic as those of the USA. Import duties on cars from non-EU countries are currently 10 percent. Analysts expect Chinese electric cars to become another 10 to 25 percent more expensive.

Matthias Schmidt of Schmidt Automotive Research said the increase in US tariffs on Chinese electric vehicles to 100 percent was “pure protectionism” but the EU’s response would be more proportionate. He told BBC News: “If the EU imposes tariffs of no more than 25 percent, it is more about creating a level playing field and offsetting the 30 percent cost advantage of Chinese manufacturers.”

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    Why Europe's carmakers are against EU tariffs on Chinese electric cars

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