Tax on Chinese electric car imports could rise to 36% over five years

AFP/Archives – GABRIEL BOUYS

While a tax already existed for vehicles manufactured in China and imported into Europe, at a rate of 10%, customs duties could also be added by the end of October. To hope to avoid this, the Middle Kingdom must reach an agreement with the European Union (EU) by then. The latter assured on Tuesday, August 20, that it was willing to listen to another solution from Beijing.

The axe threatens to fall for Chinese vehicles. By the end of October, if nothing changes, customs duties will be added without mercy on these imports. As the electric market struggles to find a place on the European continent, this new financial barrier could deal a fatal blow to imports.

As AFP points out, for these additional customs duties to be added, the consent of the Twenty-Seven is required. The European Commission specifies in a press release that these new customs tariffs would replace the provisional taxes established since the beginning of July, which could rise to 38%.

These new rates, criticized by some Member States including Germany and Sweden, have caused a stir on the Chinese side. The country says it is “vigorously” opposed to the project and calls on the EU to find “appropriate solutions to avoid an escalation of trade frictions”. The Commission, wishing to avoid conflict despite everything, announced at the same time that it would not collect, all things considered, the provisional taxes that came into force on 5 July. Although these are still being paid, they are blocked in a specific bank account that will subsequently allow this money to be returned. Just another way to make the pill easier to swallow.

These power games are only the result of the growing trade tensions between the West and China. The latter is accused of destroying competition in various sectors, including wind, solar energy and battery production.  

Fearing that its factories would disappear, the European automobile industry has reportedly asked the Commission to find common ground to safeguard the continent's industry. In this area, the Old Continent stands out in petrol and diesel engines, while China has taken the lead with electric models, by making long-standing investments in batteries.

Electric models from China have already managed to capture 22% of the European market. A meteoric rise when we know that this was only 3% three years ago. On the other hand, the American brand Tesla, whose models are manufactured in China, will see a reduced tax of 9% applied for five years. The European Commission justifies this position by stating that the manufacturer receives fewer subsidies in China.

As a reminder, the automobile industry employs 14.6 million people in the Union. As if in a dead end, the organization is trying to juggle between satisfying its own sector and the risk of a conflict with the Chinese country, then its second largest economic partner. For the United States, the subtlety may have appeared less worrying, announcing in mid-May customs duties of 100% on Chinese electric vehicles entering the territory.  

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