China is considering raising tariffs on imports of gasoline cars from the US and the European Union to 25%, in response to similar measures adopted in Washington or finalized by Brussels.
In a statement published this Wednesday, the EU Chamber of Commerce in China claims to have “been informed by people knowledgeable in the sector” about this possible increase in tariffs. The levies would hit European and American automakers and have a “significant” impact on relations with the EU, he says.
Specifically, Beijing would target sedans and SUVs with engines larger than 2.5 liters, according to an interview in the official newspaper Global Times with expert Liu Bin, with influence in the drafting of Chinese policies. The step is argued in the search for a green transition in the engine and the reduction of emissions. Currently, cars imported from Europe face tariffs of 15%, Bloomberg reports, so the figures would increase by 10 points.
The shares of European automotive companies, such as Volkswagen, Mercedes-Benz or BMW, were trading this Wednesday with falls of between 1% and 2% after learning of the possible Chinese response.
Chinese electric companies are positioning themselves in the European market with the factor of lower cost as a great attraction, something that is achieved thanks to the strong state subsidies that manufacturers receive at source, says Washington. China produces more electric cars than anyone else, as well as controlling most of the battery supply chain. With a price war and a slowing economy at home, automakers are looking to expand abroad: They exported 1.55 million electric vehicles last year, about 40% of them to Europe.
To prevent the market from being flooded with Chinese alternatives and affecting European and American competition and production, the authorities respond with investigations and tariffs to level the playing field. The Asian fear is that Brussels will follow in the footsteps of the US, which last week announced tariffs of up to 100% on electric cars, a step for which Beijing went so far as to say that the Americans “have lost their minds.”
China steps up threats of retaliation as the deadline approaches for the EU to announce the results of its investigation into China’s electric vehicle subsidies. The bloc must inform Chinese exporters if it intends to impose tariffs by early June, and these could come into force a month later, according to the Eurasia Group think tank.
