Tomorrow, Europe will hit China in the wallet

Brussels puts its threat into action and will indeed implement additional customs duties on vehicles coming from China on July 5.

The implementation of these additional customs duties on electric vehicle imports from China was initially scheduled for Thursday, July 4. Given the total lack of communication this morning, from both Brussels and the manufacturers involved, there was a moment of uncertainty as to whether the European Commission had ultimately backtracked, but the announcement was indeed made during the day.

Brussels has confirmed that starting from Friday, July 5, variable customs duties of up to nearly 50% will be applied on electric vehicle imports from China. It is worth recalling that to date, Chinese vehicles are uniformly taxed at 10%. The warnings from some governments that this decision could trigger an expensive trade war with Beijing ultimately had no impact on the determination of the European Commission.

Brussels strikes quickly and hard

The latter, after an investigation lasting more than 9 months, concluded that Chinese manufacturers did not meet European requirements in terms of public subsidies. The amount of the taxes will also be adjusted according to the cooperation of the manufacturers in this investigation.

The main exporters, including BYD, the largest electric vehicle manufacturer in the world, and Geely will face customs duties of 17.4% and 19.9% respectively. While BYD currently imports only vehicles under its name, including the Seal, Atto 3, and Dolphin, Geely owns various brands such as Lotus, Lynk & Co, and Volvo. For the latter, the impact should be negligible, barring a huge surprise, as it anticipated the move by basing most of its electric production in Belgium.

MG and its parent company SAIC, on the other hand, face the heaviest penalty with an additional tax of 37.6%. Given that SAIC is a state-owned enterprise, it is not surprising that it benefits from generous advantages. However, it seems that this has gone well beyond what is reasonable… MG has had time to stockpile several thousand vehicles on European soil in anticipation of the storm.

For all others, an average tax of 21% has been decided pending further information or a sign of goodwill. Brussels has served the ball of commitment, let’s wait to see if Beijing’s response will be a soft return or a passing shot. One certainty is that the match will be long and intense.

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