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China Warns of Long-Term Impact on EU Economy from New EV Tariffs

Daniel Kim Views  

In response to the European Union’s (EU) announcement of imposing additional tariffs on Chinese-made electric vehicles (EVs), China has hinted at a strong countermeasure, stating that “this action will harm the interests of the EU.”

According to Chinese media outlets on the 16th, the National Development and Reform Commission (NDRC), the department overseeing China’s economic plans, argued in a statement released the previous day that “the EU’s imposition of tariffs on Chinese EVs for immediate gains is a typical protectionist measure.” They claimed that “this will not only hinder the global green and low-carbon transition but also have a long-term negative impact on the EU’s energy autonomy and economic security.”

They highlighted that “about 19.5% of EVs sold in the EU last year were made in China, approximately 300,000 units. One EV can reduce about 1.66 tons of carbon annually. Based on this, Chinese EVs contribute to an annual reduction of 498,000 tons of carbon.”

They further argued the EU’s dependence on energy imports. EU imports over 90% of oil and natural gas externally, and this dependency has become problematic since the Russia-Ukraine conflict. As a result, the EU has had to purchase expensive U.S. natural gas, posing a serious challenge to economic development and energy autonomy.

The NDRC also stated that “the EU’s new energy vehicle penetration rate has started to stagnate from 2023. Last year, it fell below 20%. This is due to a lack of satisfactory products for consumers. As a result, EU consumers are showing a preference for Chinese EVs. If the EU imposes tariffs on Chinese EVs, violating market laws and ignoring consumer rights, the range of car purchase options for EU consumers will significantly decrease.”

Earlier, the EU Commission decided to impose countervailing duties of 17.4-38.1% on Chinese EVs from July. In response, the Chinese Ministry of Commerce strongly objected, emphasizing, “The EU’s action is suspected of violating World Trade Organization (WTO) norms. This is a blatant protectionist action.” They stated that China plans to file a complaint with the WTO, and may take all necessary measures to protect the interests of its enterprises.

China is actively considering additional retaliatory measures. Recently, the state-owned China Central Television (CCTV) reported that “China may increase the temporary tariff rate on imported cars with a high displacement of 2.5 liters or more,” and that “the industry is pushing for the import tariff on these high-displacement cars to rise from 15% to 25%.” This may be a high possibility given the escalating tensions between the two sides due to the EU’s additional tariffs on Chinese EVs.

Daniel Kim
content@viewusglobal.com

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