The EU has notified Beijing that it intends to impose tariffs of up to 38% on imports of Chinese electric vehicles, triggering duties of more than €2bn (£1.7bn) a year and a likely trade war with China.
The tariffs will be applied provisionally from next month in line with World Trade Organization rules, which give China four weeks to challenge any evidence the EU provides to justify the levies on imported EVs.
The charges come on top of the existing 10% levy on cars imported into the EU, meaning Chinese-made electric cars face total tariffs of up to 48%.
China immediately hit back, promising to “resolutely take all necessary measures to firmly defend the legitimate rights and interests of Chinese companies”.
The move follows a nine-month investigation into alleged unfair state subsidies into Chinese battery electric vehicles (BEVs), including top brands such as BYD, Geely – part owner of the Swedish brand Polestar – and Shanghai’s SAIC, which owns the British brand MG and has a joint venture with Volkswagen in China.
In a statement, the EU said: “The provisional findings of the EU anti-subsidy investigation indicate that the entire BEV value chain benefits heavily from unfair subsidies in China, and that the influx of subsidised Chinese imports at artificially low prices therefore presents a threat of clearly foreseeable and imminent injury to EU industry.”
Under the plan, Brussels will apply five levels of tariffs. EV manufacturers that cooperated with EU investigators will face a tariff of 21%, while those who did not will be hit with the top tier of 38.1%.
The MG owner, SAIC, faces the top tariff. Geely, which owns a stake in Volvo, faces a tariff of 20%. A 17.4% duty will be applied to BYD brands, which include the Dolphin and Seal cars launched in the EU last year. The tariffs could come in as early as 5 July, adding a potential €5,250 to the cost of a €30,000 entry-level BYD car.