AsianFin -- While the European Union gets ready to slap tariffs on China’s electric vehicle (EV) imports, Germany, the largest economy and the No. 1 automobile manufacturing company of the bloc, may try to at least water down such levies.
Credit：Xinhua News Agency
The German government is working to prevent the EU’s new tarrifs on Chinese EVs from coming into force, or soften them should a full halt not be possible, Bloomberg reported, citing people familiar with the matter. German officials were reported to believe that there is still room for an agreement with China ahead of July 4, the effective date of the planned tariffs. The officials also believe they have allies within the EU, a people of the sources said, highlighting not only China, but also the EU will have to move the deal.
The European Commission announced on Wednesday that it has pre-disclosed the level of provisional countervailing duties it would impose on imports of battery electric vehicles (BEVs) from China, which would be introduced from July 4 if discussions with Chinese authorities do not result in an effective solution. The executive arm of the EU concluded through an anti-subsidy investigation that the BEV value chain in China benefits from unfair subsidisation, which is causing a threat of economic injury to EU BEV producers.
If the abovementioned duties are materialized, the European Commission would impose additional duties on three sampled Chinese EV makers, on top of the ordinary BEV import duty of 10%. The additional individual duties would be 17.4% for BYD, 20% for Geely and 38.1% for SAIC. According to the statement, other BEV producers in China, which cooperated in the investigation but have not been sampled, would be subject to the following weighted average duty: 21%, while all other BEV producers in China would face an extra duty of 38.1% if they did not cooperate in the investigation.
Hungary disagrees with EU’s “brutal” punishment of Chinese EV makers, its economy ministry said in a statement, hours after the European Commission’s announcement of its decision on provisional tariffs. The ministry called for support of the European EV industry, instead of punitive tariffs. It added that protectionism is not the solution. German Economy Minister Robert Habeck said right after the decision that "there is now an opportunity to try and hopefully succeed in stopping" the threat of a spiraling tariff escalation. The minister is reported have plans to discuss the issue with Chinese counterparts during his trip to China next week.
European auto giants including those Germany-based companies criticize the upcoming extra tariffs right after the European Commission’s announcement.
Volkswagen, Europe’s largest automaking company by revenue, said it rejects imposition of the EU’s countervailing duties as they are generally not suitable for strengthening the competitiveness of the European automotive industry in the long term. “The negative effects of this decision outweigh any potential benefits for the European and especially the German automotive industry,” the company warned. “raising import duties could trigger a series of [China’s] harsh measures and countermeasures, leading to an escalation of trade frictions.”
Mercedes-Benz Group said it was aware of the provisional duties the European Union has announced and it always stands for the free trade based on the World Trade Organization (WTO) rules, including the principle that all market participants should enjoy equal treatment. “Free trade and fair competition will bring prosperity, growth and innovation to all parties. If the trend of protectionism is allowed to rise, it will have negative consequences for all stakeholders,” the German automaker said.
BMW CEO Oliver Zipse said the European Commission’s planned tariffs were the wrong way to go for the tariffs will harm European companies and interests of the continent. Protectionism risks starting a spiral: Tariffs lead to new tariffs, to isolation rather than cooperation, the head of German auto behemoth said. He said his company believes protectionist measures like introduction of import duties do not contribute to successfully compete on international markets, and is committed to free trade.
