EU Strikes Back: Tariffs on Chinese Electric Vehicles Spark Global Inflation Fears

Additional tariff of 7.8~35.3%p by manufacturer
Tesla with 10% tariff… Increased to 17.8%
EC “Non-cooperative manufacturers account for up to 45.3%”
China inevitably imposes retaliatory tariffs on European imported cars

The European Union (EU) has finally decided to impose tariffs of up to 45.3% on Chinese electric vehicles. China is already considering retaliatory tariffs on European products. Following the US-China trade dispute, a trade war between Europe and China broke out, and the global inflation There are concerns that fear will spread.

According to the British Guardian and Reuters on the 29th (local time), the European Commission (EC), the EU’s executive branch, announced, “As a result of the anti-subsidy investigation, we have decided to impose a definitive countervailing duty on Chinese electric vehicles for five years.” This final tariff came about a year after the EC began its investigation.

The EU’s tariff on Chinese electric vehicles is currently 10%. The EC decided on additional tariffs of 7.8 to 35.3 percentage points (p) for each manufacturer (brand). The final tariff rate is 17.8-45.3%.

Tariff rates vary from company to company. Differential charges were levied depending on the extent of cooperation with the EC when investigating the production area and origin of key parts.

American Tesla exports Model 3 and Model Y produced at the Giga Shanghai factory in China to Europe. The current tariff is 10%. However, a tariff of 27.8% was determined by adding 17.8%p.

Several Chinese domestic brands, including Shanghai Automobile (SAIC), did not cooperate with the investigation and were hit with a 45.3% tariff. In effect, exports to Europe have been blocked.

China’s Ministry of Commerce strongly protested in a statement, saying, “We do not agree with this decision and cannot accept it.”

China began responding early ahead of this decision. An anti-dumping investigation began on European pork in June. In August, an anti-subsidy investigation into dairy products was launched. In early October, it was announced that temporary anti-dumping measures would be implemented on EU brandy. It is expected that this scope will now spread to automobiles.

The tariff war between the EU and China could be a global inflationYou can load this function. In terms of global automobile market size, China ranks first, followed by the United States and the EU. Chinese electric vehicles are already blocked by 100% tariffs in the United States.

Chinese electric vehicle companies, looking for a way out, turned their attention to Europe, where tariffs are around 10%. However, with the finalization of tariffs, it has become difficult to target the European market.

A tariff war leads to an increase in the price of imported goods, and if there are no substitutes, it leads to a rise in prices. Global prices of raw and subsidiary materials have already risen significantly due to wars in the Middle East and Europe and a trade war between the United States and China.

There are also concerns in the United States. Former President Donald Trump pledged, “If I win the presidential election, I will collect more tariffs from our allies.” Accordingly, the Nobel Prize winners in economics warned in a statement on the 24th that “high tariffs can lead to high inflation.”

Ultimately, it is expected that the EU and China will seek a compromise regarding tariffs on electric vehicles. This means that tariffs will be imposed for now, but negotiations will continue. China proposed not to pay tariffs and instead set a ‘lower sales price’ for exports. This means that there will be no low-price competition, but the calculation method varies from country to country, so the EU cannot make a final decision.

In fact, the French Ministry of Finance and Economy supported this decision, saying, “The EC has made an important decision to protect and defend our trade interests.” In contrast, Germany, which is making a lot of money in China’s luxury car market, is concerned about retaliatory tariffs. The German Automotive Industry Association (VDA) pointed out that “additional tariffs are a setback for free trade” and “could lead to widespread trade conflict and an increase in car prices.”