The EU’s trade war with China is hanging in the air. Customs duties may disrupt the market

The European Commission is considering imposing additional tariffs on electric cars from China. They would be as high as 38 percent. Brussels believes that state subsidies for Chinese electric vehicles are illegal, thus harming market competition and European manufacturers.

Electric cars from China arouse emotions

Relations in the electric car segment between China and Europe are very important. The European Union is the largest importer of electric cars from China. It is responsible for nearly 40 percent. Chinese exports. European interest in electric cars is due to, among others, from the need to abandon combustion cars imposed by the EU. From 2035, there will be a ban on registering such vehicles.

– Customs duties are unlikely to disrupt the development of electromobility – says Piotr Krzysztofik from the analysis department of PKO BP in an interview with money.pl. – Continuing technological changes and the development of charging infrastructure equalize the prices and costs of using electric cars compared to combustion cars. This works to the advantage of the battery segment. Therefore, it is difficult to expect that customs duties will change the structure of imports in favor of combustion engines – he explained.

How will China aggregate?

According to Krzysztof, this will only improve the competitiveness of European brands. – It is still a mystery how China will react and how it will affect the market. Maybe they will introduce tariffs on cars imported from us, maybe they will redirect exports to other markets, or maybe they will start opening their factories in Europe – he wondered.

For now, China has responded with a threat. Beijing hopes that the European Union will reconsider the issue of tariffs on Chinese electric vehicles and stop heading in the “wrong direction.” China has threatened to take action to protect its interests following the European Commission’s decision. The European agricultural sector is most vulnerable to the response. First of all, French brandy and Spanish pork exported to the Middle Kingdom are at risk.

Marcin Przychodniak from the Polish Institute of International Affairs notes that “climate protection comes last in Chinese electric cars.” “The first is the slow but progressive deterioration of the European automotive industry as a result of Chinese unfair competition and overproduction,” he writes. Therefore, he appeals not to treat the increase in customs duties as Brussels withdrawing from climate policy.

Will the tariff impact higher prices?

Piotr Krzysztofik, however, wonders whether increasing customs duties will not indirectly discourage Europeans from buying electric cars. – Usually, all tax changes ultimately affect the client anyway – he says in an interview with money.pl. However, he notes that Europeans are buying more and more expensive cars anyway, so perhaps this change will not actually change anything, and will at most encourage EU residents to buy electric cars from European manufacturers.

There are more questions than answers. The most important thing, however, is whether increasing the duty will actually bring the intended effect? Maciej Kalwasiński, an analyst at the Center for Eastern Studies dealing with China, doubts this. “The tariffs are so low that they will not stop the inflow of ‘electrics’ from China. The cost advantage of companies producing overseas is much higher. Manufacturers will reduce margins, but they will still earn better on cars exported to the EU than on those sold in China,” he wrote. X platform

They also notice this threat. “It is unlikely that EU tariffs on imports of Chinese electric vehicles will be high enough to slow down the market share growth of Chinese car manufacturers,” they wrote at the end of April. Their calculations showed that for the European market to become unattractive for Chinese exporters of electric vehicles, customs duties would have to be 40-50 percent, and in the case of giants such as BYD, even more.