More bad news for Chinese carmakers.

Following hefty new import taxes on their EVs in the USA, Europe is now also bringing the hammer down on heavily subsidized vehicles from the People’s Republic.

The EU Commission has provisionally imposed additional import duties on electric cars made in China. Depending on the manufacturer, the surcharges range between 17.4% and 37.6%, and that’s on top of any already existing import duty. For now, these countervailing duties will apply from July 5 for a maximum period of four months.

The duties will not be officially introduced until November, by which time the EU wants to make a final decision on them. The time until then is effectively a transition period during which companies do not yet have to pay the duties but must guarantee them.

The punitive tariffs will sting especially bad for BYD. The company is currently sponsoring the European Football Championship on a grand scale in an attempt to muscle in on car-loving countries like Germany.

BYD will face a provisional punitive tariff of 17.4%, Geely 19.9%, and SAIC 37.6%. Geely is the company behind the electric Smart 1 and 3 models, and the Volvo EX30.

SAIC builds the MG 4, which is popular in Germany. Other manufacturers will face 20.8% extra duties, and companies that did not cooperate in the investigation will face a punitive tariff of 37.6%.

The EU Commission had already announced the tariff surcharges on the previous rate of 10% in mid-June.

They are the result of an investigation that showed that the entire value chain for electric cars in China is heavily subsidized, and that imports of Chinese electric cars pose a clearly foreseeable and imminent threat of damage to the EU industry.

According to the Commission, Chinese electric cars are usually around 20% cheaper than models manufactured in the EU.

The EU Commission’s actions are causing concern in some quarters, as fears of retaliatory measures that could hit German car manufacturers in particular are being voiced.

China is the largest car market in the world and was the third-largest export market for vehicles from Germany in 2023, after the USA and the UK. Strangely, German carmakers could not only be affected by Chinese countermeasures but also by the new EU measures themselves, because some of them produce vehicles in China for export.

The enthusiasm for the new EU tariffs is therefore a lot lower than one might think, especially in Germany.

At the moment, it looks likely that the new rules will come into force in November, but EU states could still stop the proposed tariffs if a so-called qualified majority voted against the proposal.

Qualified majority usually means that at least 15 EU states, which together make up at least 65% of the total population of the Union, must agree.