Tariff row on electric vehicles grows as China challenges EU tariffs at WTO

China has filed a formal complaint with the World Trade Organization (WTO), challenging the European Union’s decision to impose provisional anti-subsidy tariffs on imports of Chinese-made electric vehicles.

The EU launched anti-subsidy investigations into EU imports of electric vehicles from China in October 2023 to determine whether Chinese value chains benefit from illegal subsidies.

In June, the European Commission “provisionally concluded that China’s battery electric vehicle (BEV) value chain benefits from unfair subsidies, causing a threat of economic injury to EU BEV producers.”

The provisional import tariffs – which come on top of a current 10% tax – were imposed from July 5 and are for a maximum duration of four months.

This autumn, the EU is expected to decide whether the provisional duties – of up to 38% depending on the brand and whether it was sampled in the EU investigation – will become permanent.

The EU tariffs, however, have escalated trade frictions, with China opening anti-dumping investigations into EU imports, targeting cognac and pork imports from the bloc.

Now China is taking the EU to the WTO over import tariffs on electric vehicles.

China filed a complaint to seek a ruling under the WTO’s dispute settlement mechanism on Friday, China’s Ministry of Commerce said in a statement published by Bloomberg.

With the complaint, China is trying to “protect the development rights and interests” of the EV industry, Beijing said.

“We urge the EU to immediately correct its mistakes and jointly protect China-EU economic and trade cooperation as well as the stability of the electric vehicle supply chain,” said a spokesman for the Chinese Ministry of Commerce.

EU member states are divided over provisional tariffs on electric vehicle imports from China, as many governments try to avoid a trade war with China and protect the profits of the biggest automakers.

The industry also criticized the tariffs.

The VDA, Germany’s car manufacturers’ association, said the “declared objective of ensuring conditions of fair competition and protecting the domestic industry from unfair practices will not be achieved” by the anti-subsidy tariffs.

“European anti-subsidy tariffs would not only affect Chinese producers, but also European companies and especially their joint ventures,” the VDA added.

By Tsvetana Paraskova for Oilprice.com

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