China is limbering up for a massive trade counterattack against the EU after its thriving electric vehicle market took a brutal hit following the European Union's decision to impose substantial additional taxes on all EVs made in China.
China stated after the announcement that it “firmly opposed” the “protectionist” decision. It has already launched retaliatory probes into European brandy, dairy, and pork products imported into China.
Ten EU member states, including France, Italy, and Poland, supported imposing tariffs of up to 35.3%, in addition to existing duties of 10%.
Only five countries, including Germany and Hungary, voted against the measures, while 12 others, including Spain and Sweden, abstained—an insufficient number to block the tariffs.
The EU, which provisionally approved the tariffs in June after an inquiry found that Beijing’s state aid to auto manufacturers was unfair, now has the authority to impose steep tariffs for five years, starting next month.
“Today, the European Commission’s proposal to impose definitive countervailing duties on imports of battery electric vehicles (BEVs) from China has obtained the necessary support from EU member states for the adoption of tariffs,” the EU stated in a press release on Friday.
The European Commission indicated last week that it would continue discussions with China regarding the tariffs.
In recent months, Canada and the United States have imposed significantly higher tariffs of 100 percent on Chinese electric car imports.
German automakers criticized the EU’s decision.
Mercedes-Benz called the tariffs a “mistake” and urged the European Commission to delay their implementation, while BMW stated that the move marked a “fatal sign” for Europe’s auto industry.
Crisis-stricken Volkswagen, meanwhile, called on the EU and China to continue discussions about the issue, expressing that an alternative solution was still possible.
Swedish automaker Volvo Cars, owned by China’s Geely Holdings, stated that it would “continue with our long-held strategy of building our cars where we sell them and has committed significant long-term investment into Europe,” according to a statement.
French-Italian conglomerate Stellantis noted that the industry is facing pressure from plans to reduce CO2 emissions and from Chinese competition, emphasizing that, at this time, “policies supporting demand and ensuring stability of the rules are more important than ever.”
Australia, on the other hand, continues to welcome Chinese EVs, with more than 80% of electric vehicles sold in Australia being made in China—including affordable BYD models and Tesla’s hugely popular Model 3 and Model Y.
Battery EVs are selling well here; however, excluding the regenerative-type hybrid that Toyota continues to favor, BYD and other companies are now promoting the so-called plug-in hybrid model, which features a small internal combustion engine and smaller batteries, requiring fewer recharges and offering a much longer range of over 1,000 kilometers under certain driving conditions.
