The European Commission has imposed provisional import duties ranging from 17.4% to 37.6% on electric vehicles (EVs) manufactured in China, citing unfair state subsidies throughout the manufacturing and sales process.

These duties took effect starting Friday and will last for up to four months, the commission announced in a statement on Thursday. During this period, European Union (EU) member states will vote on whether to make these tariffs permanent for a five-year term.

EU Imposes Anti-Subsidy Duties On Chinese EVs : Voting and Impact

A qualified majority, meaning at least 15 out of the 27 EU countries representing at least 65% of the total EU population, will need to vote against the duties to prevent them from becoming permanent.

"Our investigation concluded that the battery electric vehicles produced in China benefit from unfair subsidization, which is causing a threat of economic injury to the EU's own electric carmakers," said Valdis Dombrovskis, the commission's executive vice president in charge of trade.

This decision follows a nine-month investigation by the European Commission, the executive body of the EU.

Affected Chinese Producers

Three Chinese EV producers were specifically targeted with individual duties: BYD received 17.4%, Geely 19.9%, and SAIC 37.6%. Other cooperating producers that were not part of the sample received 20.8%, while non-cooperating companies faced the highest duty of 37.6%. Tesla has requested an individually calculated final duty rate for its EVs produced in China, anticipating it to be below the 20.8% rate for cooperating producers.

Although importers will not pay these duties during the provisional period, they must provide bank guarantees, which will be converted if the duties are confirmed.

EU Imposes Anti-Subsidy Duties On Chinese EVs : Response from China

Chinese officials have vowed to take all necessary measures to counter the planned EU tariffs. The commission noted that trade experts will continue discussions with their Chinese counterparts over the next four months to find a solution compatible with World Trade Organization rules.

The new anti-subsidy duties add to the existing 10% import tariff on EVs. EU duties remain significantly lower than those imposed by other countries; for example, U.S. duties stand at 100% plus 2.5% of most-favored-nation duties, according to commission figures.

He Yadong, a spokesperson for China's Commerce Ministry, reiterated China's strong opposition to the EU's anti-subsidy investigation during a news conference on Thursday. He urged the EU to consider objections from some member states and car companies to avoid countervailing measures that could harm mutually beneficial cooperation.

Conclusion

The imposition of these duties marks a significant development in the ongoing trade tensions between the EU and China over electric vehicles. As the EU moves forward with these measures, all eyes will be on the upcoming votes by member states and the ongoing negotiations between EU and Chinese officials.