Recently, the EU imposed import tariffs on China-manufactured automobiles. Among these companies is the biggest automaker in the world, Tesla. However, the EU has curbed its tariffs on Tesla for various reasons. For other car manufacturers, the tariff rate is as high as 36%, but for Tesla, the tariff has been set to 9%, which is much less than the previously proposed tariff of 21%.
The tariffs imposed in Brussels on Tuesday have one goal in front of them: to level the playing field between the European and Chinese EV manufacturers. The Union stated that many Chinese manufacturers are getting impressive subsidies from the Chinese government, which helps them lower their final costs and emerge as a market leader in terms of the number of sales. It’s worth noting that the final tariffs will come over the 10% already charged for EVs produced in China.
The tariffs proposed were massive initially, but they have dropped slightly since then. For instance, China’s biggest EV company, BYD, will have to pay a 17% tariff. Similarly, China’s SAIC and Geely Auto, owners of MG Motors and Volvo, will pay 36.3% and 19.3% tariffs, respectively. All of these tariffs will be imposed for a total of five years and will present an opportunity for European manufacturers to pick up the pace.
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One reason Tesla is not subjected to high tariffs is that, unlike many car manufacturers, Tesla owns its manufacturing plant in China, the GigaFactory. Another reason for the tariff cut is, Chinese government’s intention to not help Tesla with subsidies. This move by the EU is closely followed by the tariffs imposed by the US government. However, unlike the US, the EU has not imposed a whopping 100% tariff, reflecting that they still want a good trade relationship with China while boosting their own manufacturing capabilities.
The Chinese Chamber of Commerce has shared its view on the matter and said that the tariffs will “exacerbate trade tensions between China and the E.U., sending a profoundly negative signal to global cooperation and green development.”
Moreover, companies like Volkswagen, BMW and Mercedes will also have to pay a 21.3% tariff for the cars produced in China. This is mainly because most German car companies have ties with Chinese automakers. For instance, one of the world’s biggest companies, Volkswagen, also has an entity with SAIC.
