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China brought its complaint to the WTO’s dispute settlement mechanism to “safeguard the interests” of the EV industry, according to a Ministry of Commerce statement shared by Bloomberg.
The Ministry strongly opposes the EU tariffs, as do many member states, including Germany and Hungary. BYD is currently constructing a plant in the latter following the country’s opposition to the tariffs and has reportedly been considering relocating its headquarters there from the Netherlands.
In a statement, a ministry spokesman urged the EU to face its mistakes and correct its “illegal practices.” The ministry also claimed the tariff ruling violated WTO rules and constitutes “an abuse of trade remedy measures.”
Chinese Automakers Face 45% EU Import Tariffs
The tariffs imposed last week on Chinese EV imports reached as high as 45% for some automakers, on top of the EU’s standard 10% car import duty. Each automaker pays a different rate, with those who cooperated with the European Commission’s anti-subsidy probe paying a lower rate.
Following multiple rounds of discussions in a bid to seek alternatives to tariffs, no common ground has yet been reached between China and the EU, though the latter announced last week it’s sending officials to Beijing for more talks on “price undertakings,” a mechanism which controls export volumes and pricing.
Tariffs were introduced to tackle the “unfair subsidies” enjoyed by Chinese automakers, ranging from lower-cost land, raw materials, and batteries to more favorable rates on financing loans and grants.
Beijing’s Backlash Hits EU Brandy Importers
The news of China’s complaint comes as no surprise, and Beijing’s backlash is inevitable. China has already targeted EU imports, including considering raising tariffs on imported large-engine vehicles and requiring brandy importers to pay a deposit of up to 39% of the goods’ value.
In a Ministry of Commerce meeting last week, China reportedly told its automakers, including Geely, SAIC, and BYD, to pause big investment in EU countries supporting the tariffs, according to Reuters.
The introduction of these EU tariffs follows similar measures that came into force in the US and Canada earlier this year. Canada imposed a 100% tariff from October 1st in a bid to protect its EV industry, while tariffs on Chinese EV imports to the US soared as high as 100% in May, with further tariffs of up to 50% on solar cells and 25% on some steel and aluminum imports.
At the time US tariffs soared, China threatened retaliation. We’ve yet to see what that may look like, but it could be a tit-for-tat similar to its retaliatory measures against the EU.
