Preliminary tariffs on electric vehicles (EVs) and EV parts manufactured in China have been proposed following an investigation started in 2023 about unfair subsidies provided to EV companies in China. 

The European Commission’s anti-subsidy investigation, which started in 2023, will result in new provisional tariffs of up to 38% on EV imports from China. For instance, BYD received a provisional rate of 20% while SAIC received a rate of 38.1% and a 20% rate was imposed on Geely. The EU’s new provisional tariffs for EV imports from China will be applicable on 4 July 2024. However, according to Bloomberg, the EU has lowered the final provisional rates for SAIC and Geely to 37.6% and 19.9% respectively, while BYD’s rate remained the same.  The tariffs varied among different Chinese automakers, but was placed on top of the 10% tariff already in place.The new tariffs will affect non-Chinese automakers producing in the country as well, like Tesla and other European car companies who have joint 

China has long rejected  accusations of unfair subsidies, saying the development of its EV industry has been the result of advantages in technology, market and industry supply chains.

Some EU Member States including Sweden and Germany have voiced concerns over such tariffs, given that many European car companies are also manufacturing in China, and would likewise be caught by such tariffs when exporting back to Europe. These European companies tend to be in joint ventures with Chinese companies, and would thus fall under the definition of Chinese exports. However, French car manufacturers are said to be highly supportive of these tariffs, in order to stave off competition from Chinese (and German) companies. 

In a sign of prevarication from the EU, both sides have agreed to discuss the impact of the tariff effects, with the Commission even taking the opportunity to welcome Chinese companies to invest in manufacturing their EV parts in Europe. Negotiations for further discussion have been scheduled to take effect on 4 July. 

Car manufacturers around the world, including in ASEAN, are closely watching the development of the implications on such tariffs, as it may lead to possible trade diversions and changes in supply chain management. 

Further retaliation from China could also be expected, with Chinese authorities deciding to launch anti-dumping investigations into imported EU pork exports soon after the announcement on the EVs tariffs were made. China’s Ministry of Commerce said the investigation was officially launched on Monday and is expected to conclude within 12 months, though it could be extended for a further six months.