- On June 12, the European Commission pre-disclosed additional duties between 17 percent to 38.1 percent on imported Chinese EVs, partially depending on the carmakers’ level of cooperation to the subsidy probe. This will be on top of the existing 10 percent import duty.
- China has condemned the decision and threatened countermeasures. China has already initiated anti-dumping investigations into pork and brandy from the EU, targeting France and Spain, which support the tariffs.
- EU member states will vote on the level of countervailing duties before any definitive measures are implemented. Approval or rejection of these measures requires a „qualified majority,“ meaning that at least 55 percent of member states representing 65 percent of the EU population must be in favor or against.
- Germany, Hungary, and Sweden are likely to vote against the tariffs, given their business and trade dependencies on China. France, Spain and Italy are likely to endorse the measures. The positions of the remaining 22 member states remain unclear.
- China will try to convince more EU countries to reject the tariffs. During the negotiation phase, China will likely adopt targeted measures, such as the announced anti-dumping investigations, to strengthen its bargaining power.
- If the definitive tariffs are enacted, China will likely resort to informal pressure on European companies operating in China and impose retaliatory tariffs on a similar amount of goods affected by the EU’s EV tariffs. Given the current investigations, French brandy and Spanish pork are likely targets.
- China has also hinted at imposing 25% tariffs on cars with engines larger than 2.5 liters. This will impact Germany the most, which China sees as an ally in the EV probe. China has adopted auto tariffs before, during the trade war with the US and may be willing to do so again, esp. in the efforts to promote domestic EVs in the premium sector.
Sinolytics is a research-based business consultancy entirely focused on China. It advises European companies on their strategic orientation and specific business activities in the People’s Republic.