EU goes ahead with tariffs on Chinese electric vehicles, shaking up automotive supply chain

On October 4, the European Commission secured the necessary support from EU Member States to impose tariffs on battery electric vehicles (BEVs) imported from China. This move is aimed at countering the unfair subsidies that, according to the Commission’s investigation, are distorting the EU market by making Chinese-made BEVs significantly cheaper.

Anti-subsidy investigation and provisional tariffs

The anti-subsidy investigation began in October 2023, with provisional tariffs introduced in July 2024. These provisional duties ranged between 17.4% and 37.6%, depending on the specific Chinese manufacturer, and were an addition to the existing 10% import tax on cars. This step reflects the EU's determination to protect its automotive industry from the effects of subsidized imports.

Implications for the metalworking sector

The potential effects of these tariffs extend beyond the automotive sector, with significant implications for the broader manufacturing supply chain. If Chinese manufacturers face reduced market access in Europe, European automotive production could see a boost, which might positively impact local suppliers, including those in metalworking. Increased demand for steel, aluminum, and specialized alloys would likely create new opportunities for metalworking professionals involved in producing components for electric vehicles, thus strengthening the local industrial base.

Ongoing negotiations and potential retaliation

At the same time, the EU remains open to negotiations, as ongoing talks with China aim to find a WTO-compliant solution while addressing unfair subsidization concerns effectively. If a mutually satisfactory solution is not found, China could choose to retaliate by imposing tariffs on European goods, which may affect industries such as luxury goods, agriculture, or high-tech equipment. Such measures could escalate tensions and have broader economic implications.

The broader picture

The United States has recently escalated its stance against Chinese electric vehicles, with the Biden administration raising tariffs on Chinese-made EVs from 25% to 100%. This move aims to protect domestic manufacturers from what is perceived as unfair competition, mirroring the European Union's strategy to counter Chinese subsidies.

Canada has taken a similar approach. On August 26, 2024, the Canadian government announced a 100% surtax on all Chinese-made electric vehicles, which took effect on October 1, 2024.

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