China warns Europe of a trade war over EV tariffs
- Brussels will provide Chinese-made electric cars with additional tariffs of up to 38%
- Aimed at protecting car manufacturers who felt they were being undermined by the Chinese
- Now the Chinese government has stepped up the rhetoric
Officials in Beijing have warned that tough tariffs on electric cars could spark “a trade war” with Europe.
Tensions have increased in recent weeks after Brussels said it would impose additional tariffs of up to 38 percent on Chinese-made electric vehicles (EVs).
The move is aimed at protecting European carmakers who felt they were being undermined by Chinese companies such as BYD and Geely.
Warning: European carmakers feel they are being undermined by Chinese companies like BYD and Geely
The duties come on top of the existing 10 percent levy on cars imported into the EU, meaning they now face total tariffs of as much as 48 percent.
But the measures – which are the result of a nine-month investigation – threaten to drive up the price of electric vehicles.
Chinese companies have urged Beijing to hit back against European cars. Now the Chinese government has stepped up the rhetoric.
“The European side continues to escalate trade frictions and could trigger a trade war,” a Chinese Commerce Ministry spokesperson said yesterday. ‘The responsibility lies entirely with the European side.’
The comments came shortly before German Economy Minister Robert Habeck kicked off a three-day trip to the region, where he aimed to defuse Chinese anger.
German carmakers would be the most exposed to any countermoves from China, as almost a third of their sales came from there last year.
The EU’s car exports to China reached £16.5 billion in 2023, while the bloc bought £8.2 billion worth of electric vehicles from China, according to figures from the EU statistics agency.
British brands such as MG and Lotus, which are owned by Chinese parent companies, could also be caught in the crossfire.
US giant Tesla has also suggested it will increase the price of its electric vehicles because of the tariffs.
The Tesla Model Y, which costs around £45,000, is currently the most popular electric car in Britain.
The latest European tariff will come into effect on July 5 unless China and the EU can reach an agreement. Britain is silent on whether it will impose tariffs itself, but ministers have previously said they would wait for the results of the European investigation.
And Britain has shown a more welcoming attitude towards China’s car industry in its efforts to persuade its companies to set up production facilities in Britain.
In November, Investment Secretary Lord Johnson said the country could take advantage of Brexit freedoms to sell electric cars from Chinese companies to the rest of the world.
“China has a very strong electric car industry, they have a lot of excellent technology and they make great cars,” he said.
