The EU will impose additional tariffs of 17.4% to 38.1% on electric cars produced in China, the European Commission announced on Wednesday (12 June), as preliminary results from its anti-subsidy investigation confirmed prices are being distorted by Chinese state support.
The value chain of Chinese electric cars “benefits from unfair subsidisation, which is causing a threat of economic injury to EU battery electric vehicles producers,” EU Commission Vice-President Margaritis Schinas said on Wednesday (12 June).
“When our partners breach the rules, we will assert our rights,” Executive Vice-President Valdis Dombrovskis said in a statement.
“Today we have reached a milestone in our anti-subsidy investigation,” he said, adding that “this is based on clear evidence of our extensive investigation and in full respect of WTO rules.”
Duties will differ per carmaker, with Chinese state-owned manufacturer SAIC facing the highest duty at 38.1%, Chinese Geely to face 20% and BYD 17.4%.
Selling EVs below the profitable rate to corner a market and destroy competition. You know, the economic term “dumping”.
Below the profitable rate? Last I checked, Chinese EV manufacturers were either making money hand over fist or getting BTFO’s of the market by those that could.
Good for them. The point is not that they are doing “bad things”. “Dumping” is not a curse word, it’s an economic strategy, one that’s practised by a whole bunch of companies, and not just Chinese ones. When Auchan is selling watermelons at a rate where they barely make any money over a single sale - but make a ton of money on other stuff you get while shopping for watermelons, it destroys farmer’s markets, for example.
All I’m saying is that the choice before the EU leadership was either letting Chinese EVs into the market and risk getting into a position where Chinese companies - and by extension the Chinese government - can pull the levers on the EU car market, in exchange for us getting to buy cheaper EVs right now.
The EU - and you can fill in the blank whether they did it because they wanted to protect EU carmakers’ business, or they wanted to prevent another situation similar to the one with Russian gas - decided that the risk is not worth it. My guess is that some voted as they did because of the former, others because of the latter. That said, you can’t really say that the EU would be “crooked” for either of these things, as fighting for the EU car industry against other countries’ car industries is well within their mandate, as is protecting the EU’s strategic political autonomy.
It’s just how things are, like with the great firewall. If someone wants to sell software services to China, they have to conform to their standards. You can say it’s good or bad, but that’s just how things work. As a European, I don’t care about this specific issue either way, we should be buying fewer cars, electric or otherwise. People who live in places in the EU where you need cars because there’s no good public transport also tend to be living in places where you can’t afford to buy new anyway, not even at BYD prices.
I agree, dumping is well-defined. Here’s the problem, though:
Chinese EV manufacturers are selling their cars domestically for far less than they are in Europe. They’re already price-gouging their European customers. Moreover, only something like 10% of Chinese car production is made for export, and much of that is by European/American brands that are only producing in China because of the cost advantage. This is compared to 70% or more in the case of Germany and Japan.
There’s a far stronger case for overcapacity and dumping from Germany and Japan than there is for China. It’s an absurd bending of WTO rules to align with, as you said, protecting EU carmakers.
It’s protectionist policy, and that’s fine, but it should be clear to everyone that dumping and overcapacity are bullshit justifications for it. I absolutely agree with you that it should be a part of the EU mandate to protect EU workers and EU businesses. I don’t disagree with the tariff, I just don’t like the justification being given for it.