The European Union (EU) has announced that it will reduce the planned additional tariff on Tesla’s electric vehicles (EVs) imported from China to 9 percent. This decision comes as part of the EU’s ongoing investigation into Chinese state aid to carmakers. Initially, Brussels had planned to introduce duties of 20.8 percent on Tesla vehicles manufactured in China.
The decision to lower the additional tariff to 9 percent was made following a request from Tesla, which argued that the duty rate should reflect the level of subsidies it receives from China. After conducting an investigation, including visits to Tesla’s factories in China, the EU found that Tesla receives fewer subsidies from Beijing compared to domestic EV producers scrutinized by Brussels.
While the new plan still represents an increase in duties on China-made car imports, with the standard 10 percent duty applied by the EU, it aims to address what the EU describes as “unfair subsidy schemes in China.” The EU’s goal is to ensure fair competition between EU and Chinese industries.
In addition to Tesla, three Chinese EV carmakers that were investigated by Brussels will also face slightly lower provisional duties. BYD will pay a tariff of 17 percent, Geely will pay 19.3 percent, and SAIC Group will face the highest import rate of 36.3 percent.
The flood of cheap EV exports from China, driven by years of state subsidies, has become a point of contention with trade partners like the EU and the US. In response to Brussels’ scrutiny of its state aid, China has threatened to take “all necessary measures” to defend its rights and interests. This includes initiating anti-dumping investigations into products like pork and European brandy.
China has also filed a complaint with the World Trade Organization (WTO) over the EU’s proposed duties. However, the EU stated that the WTO consultation will not affect the ongoing anti-subsidy investigation into China-made EVs.
Overall, the EU’s decision to lower the additional tariff on Tesla’s EVs from China reflects a willingness to reevaluate duty rates based on the level of subsidies received. This move aims to create a level playing field for EU and Chinese industries. The ongoing investigation and potential definitive duties in October will shape the future of EV imports between the EU and China.
