China And Germany Grapple Over EV Tariffs

China has proposed that German car manufacturers might benefit if their government persuades the European Union to eliminate tariffs on Chinese electric vehicles.

According to Bloomberg, The Chinese are offering to lower existing tariffs on big displacement engine cars in exchange for scrapping planned levies on EV imports from China. Currently, Beijing imposes a 15% tariff on passenger vehicles from the EU. This discussion occurred amid the EU's proposal to raise tariffs on Chinese electric cars to move as high as 48% later this year.

To be fair, the European Commission states its proposed tariffs aim to balance out Beijing’s significant state subsidies to electric vehicle manufacturers. The goal is to offset Chinese subsidies with equivalent EU import tariffs in order to keep domestic vehicle prices competitive. Previously, China had indicated it could impose a 25% fee on large European cars, significantly impacting German luxury carmakers like Mercedes-Benz and BMW–but now Beijing is pivoting to compromise.

Recently, the EU notified EV manufacturers about new provisional tariffs starting in July, following a long investigation. These duties will initially be introduced by a guarantee and collected if definitive fees are imposed in November.

Some Chinese companies will face specific rates: SAIC Motor Corp. is preparing for a 38.1% tariff, BYD for 17.4%, and Geely (owner of Volvo Car AB) for 20%. Other Chinese EV producers will see a weighted average duty of 21%, while non-cooperating firms face a 38.1% levy.

China has criticized these moves as protectionist. As talks continue, China might offer greater transparency on industry policy funding or withdraw subsidies deemed inconsistent with WTO rules, potentially presenting a last-minute offer before final penalties are decided in November.

This article was co-written using AI and was then heavily edited and optimized by our editorial team.

Become an AutoGuide insider. Get the latest from the automotive world first by subscribing to our newsletter here.