Eight months after it first announced its anti-subsidy probe, the European Union has finally made its tariff moves. On Wednesday, the European Commission said it will impose duties of up to 38.1% on Chinese-made EVs, starting next month.
The response in Chinese state media was fierce. One commentary piece from Xinhua, China’s state media agency, called the decision “misguided” and a “thinly veiled excuse for protectionism.” Another published Xinhua piece noted that the EU’s “best-laid plan for [an] economic boom” is to partner with China.
An opinion piece in the Global Times, a state-owned English-language media outlet, claimed that Europe had “chosen to surrender to protectionism.”
Chinese officials also made their displeasure known. Officials at the commerce ministry said the EU’s tariffs were “counter to the spirit of cooperation.”
Chinese EV makers largely did not publicly criticize the EU’s decision in the wake of the announcement. Chinese EV company Nio said it opposed the EU’s decision but remained committed to the European EV market. Other Chinese brands, like BYD and Chery, have announced plans to build cars in Europe, which would not be subject to the tariffs.
Previously, Chinese EV manufacturers like BYD pushed back against claims that their success was the result of state support, instead crediting fierce competition at home and internal efficiency.
Shares of major Chinese EV makers and startups appeared to be unaffected by the ruling. Shares in BYD rose almost 6% in Hong Kong trading on Thursday; the Chinese EV giant is subject to a lower EU tariff rate than several of its Chinese peers. Nio shares rose 2%, while SAIC Motor—subject to the highest tariffs—dropped 1.5%.
Only tariffs exceeding 50% would make the European market unattractive to Chinese EV makers, research firm Rhodium claimed in a report in late April.
Will China retaliate?
The tariffs do not enjoy unanimous support in Europe. The German Association of the Automotive Industry said the potential damage caused may be greater than the benefits.
Major German car brands are still big players in the Chinese market and could potentially be at risk of retaliatory tariffs. China accounted for about a third of sales from BMW, Volkswagen, and Mercedes-Benz in the first quarter of 2024.
Other European goods, like luxury items, wine, and agricultural products, could also be threatened by Chinese retaliation. In January, Beijing launched an antidumping probe into French brandy, months after the EU’s anti-subsidy probe into EVs, which analysts described as a possible “first bullet” in a Europe-China trade war.