China Eyes Retaliatory Tariffs on European Cars Amid EV Trade War

(Image: Reuters)

Chinese automakers have called on Beijing to increase tariffs on imported European combustion (ICE)-powered cars in response to the European Union's recent restrictions on Chinese-made electric vehicles (EVs). 

This was revealed in a report by the state-backed Global Times following a confidential meeting on June 18 organized by China's Ministry of Commerce in Beijing.

Major Chinese automakers like SAIC and BYD, alongside European automakers including Volkswagen, BMW, and Mercedes-Benz, attended the meeting. The focus was on pressuring Europe to reconsider the tariffs aimed at shielding its car industry from Chinese competition.

China and Europe have a reason to work towards a solution so that Chinese EV manufacturers won't have to incur huge extra expenses. 

The European Commission announced that anti-subsidy tariffs of up to 38.1% would be imposed on imported Chinese electric vehicles (EVs) starting in July.  In response, the Commission stated that it was open to exploring amicable alternatives. This action escalates the trade spat between Beijing and the West, much like the U.S. tariff hike in May.

It is unreasonable, according to critics like Zhang Yansheng of the China Centre for International Economic Exchanges, to single out China based on its demand for new energy vehicles and capacity utilisation. He cited China's initiatives to alleviate overcapacity and forecast higher capacity utilisation in the next years.

China had earlier suggested potential retaliation. Among the recommendations were to increase import taxes from 15% to 25% on ICE-powered vehicles imported from the EU with engines bigger than 2.5 litres and to look into European dairy and pork imports for potential anti-dumping violations.

In 2023, Europe exported 196,000 large-engine passenger vehicles to China, an 11% increase from the previous year. 

However, exports dropped by 12% in the first four months of 2024. German automakers are particularly dependent on the Chinese market, accounting for 30% of their sales. Popular imported models include Mercedes-Benz's GLE SUV and S-Class sedans, and Porsche's Cayenne. 

Other major exporters of large-engine cars include the U.S., the U.K., and Japan, who could benefit from increased tariffs on European imports. KR

Sources: Automotive News Europe, CarNewsChina