The European Union is poised to hit cheap Chinese electric vehicles (EVs) with extra import tariffs of 25pc, raising the prospect of a trade war with Beijing.
Brussels is gearing up to announce the measures today following an eight-month investigation into the issue, which is expected to reveal how electric car makers in China have benefitted from massive state support.
With the EU’s import tariffs on EVs from outside the bloc already set at 10pc, the European Commission will tell manufacturers that it intends to raise the figure to as much as 35pc, according to the Financial Times.
However, that falls far short of the 100pc tariffs imposed by the Biden administration in the US or the 50pc level that analysts at Rhodium Group say would be necessary to make the Continent “unattractive” for Chinese brands.
With Chinese car makers fighting brutal price wars at home, they currently sell their EVs in Europe for huge profits.
It has triggered fears that the European automotive industry faces an existential threat from a wave of low-cost Chinese EVs, although EU member states have been split on how to respond.
France and Spain are the among countries that have been pushing for a tougher approach, while Germany and its carmakers have opposed the idea.
There are also concerns that hindering the introduction of cheaper cars will slow the adoption of EVs, which has so far been hampered by high prices.
Beijing has reacted angrily to the threat of a proposed European crackdown and warned it will impose its own tariffs on European goods in retaliation.
The tariffs could in theory be overturned by Germany and others when they come to a vote in November.
Meanwhile, across the English Channel, the UK has been silent on whether it will impose tariffs of its own, with ministers previously saying they will wait to see the findings of the EU investigation.
The EU launched the investigation last October amid concerns that Beijing has artificially tipped the scales in the favour of Chinese brands by pumping tens of billions of dollars worth of subsidies into its own industry, along with loans, land deals and tax breaks.
There are also concerns that overproduction of EVs in China will lead to a flood of cheap vehicles being exported to Europe.
Ursula von der Leyen, the commission’s president, has warned that the EU must “make sure that competition is fair and not distorted”, while French President Emmanuel Macron reiterated concerns about unfair competition last month.
“I’m calling for an adjustment because China now has excess capacity in many areas and exports massively to Europe,” Mr Macron told a magazine in May.
But Olaf Scholz, the German Chancellor, has repeatedly urged caution, along with major German car makers such as BMW and VW.
