The European Commission is expected to announce in the coming days whether it will impose additional tariffs on Chinese electric vehicle imports as Chinese automakers seek to strike a deal to soften the blow.
The decision on possible provisional tariffs was initially expected to be announced last week but was put off until after the European Parliament elections end on June 9.
Both the EU and China have reasons to reach a deal. China needs to make up for falling sales at home by exporting electric vehicles to the EU, the world’s third-largest economy. Meanwhile, German automakers want to access China’s auto market and electric vehicle partnerships to keep prices low.
According to HSBC Global Research, German automakers generate as much as 23 percent of their global profits in the Chinese market.
If the commission raises tariffs by 10 percent over the existing 10 percent tariff, it would cost China’s exporters another $1 billion, a cost that would likely grow if China’s automakers expand exports to the EU.
The China Chamber of Commerce in the European Union said in late May that Beijing may consider raising tariffs on large-engine automobile imports, mainly German vehicles, to 25 percent.
The trade organization said the European Commission’s probe into possible illegal subsidies by Chinese automakers had been flawed from the start by demanding information the automakers were unable to provide.
The group said in a statement that there was room for negotiation but the ball was in the EU’s court.
The European Commission is weighing its decision less than a month after the Biden Administration announced that it was quadrupling tariffs on Chinese-made electric vehicles to 100 percent.
The administration also announced increased tariffs on other Chinese exports, including solar cells, EV batteries, medical equipment, steel, and aluminum.
Tesla CEO Elon Musk denounced the Biden administration’s move despite previously warning that China was on track to “demolish most other car companies.”
