China threatens 25% tariff on EU and US cars amidst trade tensions
China is considering introducing a 25-percent tariff on cars from the European Union and the United States. Currently, only vehicles with larger engines are affected. However, some manufacturers will suffer greatly if these announcements come to fruition.
Chinese automotive brands are growing increasingly bold in foreign markets. It took only a few months for them to establish a noticeable presence in Europe and the USA. This strong expansion has alarmed authorities, prompting a thorough examination of its foundations. It was discovered that Chinese cars might be subsidized by the local government, which violates competitive principles.
The United States reacted firmly, introducing a 100-percent tariff on Chinese electric cars. The European Union has similar, though not as radical, plans, announcing an increase in the existing tariff from 10 to as high as 30 percent.
The reasons are suspicions about the subsidization of Chinese brands by their government and a lack of transparency in the activities of Chinese players in Europe. The European Commission emphasizes that companies like BYD, SAIC, or Geely do not cooperate with European authorities regarding subsidies or supply chain transparency.
Unfortunately, there are no indications that this will change. The Chinese have not presented evidence that could refute the EU and USA's allegations. Instead, they have threatened counter-tariffs of 25 percent on cars imported from Europe and the United States.
The Chinese Chamber of Commerce at the EU published a statement on X, indicating that it had been informed of the Chinese plans by "individuals with access to confidential information."
They referred to an interview published on Tuesday, May 21 at 11:00 AM ET by the ruling Communist Party's newspaper "Global Times," in which Liu Bin, the chief expert of the Chinese Center for Automotive Technology and Research, called for raising the tariff rate on imported cars with an engine capacity above 2.5 litres.
Last year, China imported 250,000 cars in this category, imposing a 15-percent tariff. However, World Trade Organization rules allow for an increase to 25 percent.
If this actually happens, European premium brands such as BMW and Mercedes, which sell many models with larger engines in China, will be most affected. The final decisions—at least officially—have not yet been made. However, this does not change the fact that the situation is becoming increasingly tense, and the spectre of a trade war is becoming more apparent.
