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EU's EV Tariffs: A Collision Course for Climate Goals and Global Trade? : By Komal Pooja

Article: 27/2024


The European Union’s recent decision to impose extra tariffs of 38.1% on electric vehicles [EVs] imported from China has ignited a tussle between EU and China. Less than a month after Washington announced plans to quadruple duties for Chinese EVs to 100%, Brussels said it would combat excessive subsidies with additional tariffs ranging from 17.4% for BYD to 38.1% for SAIC, on top of the standard 10% car duty. (Blenkinsop, 2024). This move, ostensibly aimed at protecting European carmakers, carries far-reaching consequences. Though it can be argued that it will level the playing field against alleged Chinese subsidies, it will also derail Europe’s Clean energy goals, inflate EV prices, and spark a wider trade war, as evidently China retaliated and announced an anti-dumping investigation into imported pork and its by-products from the European Union. The investigation announced by China’s commerce ministry will focus on pork intended for human consumption. (Cash, 2024). This introduction sets the stage for a multifaceted debate, exploring the EU's tariff policy's economic, environmental, and political implications. This article will examine China’s dominance in EV manufacturing, which is a significant player in the global EV market, the potential impact on Europe’s climate targets, and the risk of escalating trade tensions.

Background to EU’s probe into EVs- Response from member nations

The European Commission launched its investigation of China's EVs on its own initiative [ex officio] in 2023. The Commission had gathered sufficient evidence that the recent surge in low-priced and subsidized imports of electric vehicles from China into the EU posed an economic threat to the EU’s electrical car industry. As per legal requirements under EU and WTO rules, pre-initiation consultations were held with the Chinese government before publishing the Notice of Initiation (2023).

While the investigation was instigated by the European Commission, the EU’s secretariat, which is responsible for coordinating the EU's policies and activities, was informally requested by French industry and government figures, and Germany strongly opposed the probe. The investigation has also caused a stir within the EU. According to an EU official, Chinese brands accounted for 8 percent of the EU’s electric vehicle market share in 2022, while market prices for Chinese brands were 20 percent cheaper than those of European competitors (Bermingham, 2023). However, some member countries do not welcome this decision.

Timeline for EU’s probe into EVs

Sept 13, 2023- European Commission President Ursula von der Leyen announces probe

Oct 4, 2023- EU Commission formally launches probe

Mar 6, 2024- EU Commission orders registration of imports of electric vehicles

June 5, 2024- Deadline to inform EV exporters of preliminary findings and whether tariffs will be imposed

July 4, 2024- Deadline to impose provisional tariffs

Nov 2, 2024- Deadline to impose final tariffs, which could last for five years


Source: European Commission, Eurasia Group



Even before affected Chinese companies reacted to the tariffs, many European carmakers opposed the European Commission’s imposition of countervailing tariffs on Chinese EVs, saying such a protectionist move would only harm the European auto industry. “Countervailing duties are generally not suitable for strengthening the competitiveness of the European automotive industry in the long term- we reject them.” German-based Volkswagen Group said in a statement to the Global Times.

Bloomberg reported that Norway, which has the highest density of EVs in the world, will not join the EU’s increase in tariffs on Chinese electric cars, citing Finance Minister Trygve Slagsvold Vedum. “Introducing tariffs on Chinese cars is neither relevant nor desirable for this government,” Vedum said in an emailed comment.

Hungary's economy ministry said the country disagrees with Europe's "brutal" punishment of Chinese EV manufacturers. "Instead of punitive tariffs, the EU should support the European EV industry," the ministry said in a statement.

Netherlands-headquartered European automaker Stellantis said in a statement it sent to the Global Times that "as a global company, Stellantis believes in free and fair competition in a worldwide trade environment and does not support measures that contribute to the world's fragmentation."

The primary opposition to tariffs came from carmakers with investments in the Chinese market and those with significant competitive advantages. In recent years, several top European automakers have made substantial investments in China, particularly in the NEV [new energy vehicle] supply chain. Additionally, many auto parts suppliers in the EU have benefited from the emergence of China's EV makers and their growing presence in the market (Bermingham, 2023).

Tracing China’s EVs in Europe

The sales of battery electric cars in Europe have been growing quickly, with two million cars sold across Europe in 2023 alone. However, given China’s edge in battery technology and some feet being dragged by European legacy carmakers, more and more electric cars are imported from China. 19.5% of all-electric vehicles sold across the EU last year, or 300,000 units, were built in China. In France and Spain, nearly every third BEV sold in 2023 was made in China. More than half of those come from Western carmakers: 28% of all China-made EVs were imported by Tesla, with Renault’s Dacia adding a further 20%. However, the Chinese homegrown brands are quickly catching up: from 0.4% of the EV market in 2019 to 7.9% in 2023. T&E projects that the likes of BYD, MG, and others could reach 20% of the BEV market by 2027 (2024).

 Source (How Europe can use tariffs as part of an industrial strategy, 2024)

Some Chinese carmakers are also looking to set up manufacturing and assembly plants in Europe to ramp up sales of lower-cost cars in the region to rival their European competitors amid slowing demand at home.

  •      Chery Auto, China’s largest automaker by export volume, has signed a joint venture with Spain’s EV motors to open its first European manufacturing site in Catalonia. They are also considering building a car factory in Britain this decade.

  •        The world’s largest EV maker, BYD, announced in late 2023 that it will build its first European electric vehicle production base in Hungary. The plant will produce EVs and plug-in hybrids for the European market and is set to start opening in three years.

  •      China’s Leap Motor partnered with Stellantis last year and will start producing small EVs at Stellantis’ Tychy plant in Poland.

  •    State-owned SAIC, China’s second-largest auto exporter with its MG-branded cars, is looking for a European site to set up an EV production plant. SAIC already has a European parts center for its MG Motors unit in Amsterdam and plans to open a second facility in France to meet the country’s growing demand for its vehicle.

  •    In 2022, a Polish state-led venture to produce the country’s first electric car, known as Izera, signed a license agreement with China’s Geely Holding to build the country's first EV plant.

These initiatives show the strong presence of Chinese EVs in Europe, and the tariffs will have a significant impact on these ventures  (Chinese EV makers set sights on European production, 2024).

How did China become a leader in EV Manufacturing? - Analysing its Industrial Policy

China's dominance in the electric vehicle (EV) market results from a well-defined strategy and hefty government support through tax subsidies. Here's a breakdown:

  • Early Recognition of Opportunity: In the early 2000s, China realized it couldn't compete with established carmakers in traditional gas engines. EVs, a nascent technology, presented a chance to leapfrog the competition.

  • Government Investment:

  • 2001: EV technology became a priority in China's Five-Year Plan.

  • 2007: Wan Gang, an EV enthusiast, became science minister, further boosting the sector.

  • Subsidies & Incentives:

  • Starting in 2009, Financial subsidies were offered for EV production (buses, taxis, cars) and consumer purchases. This brought down costs for both companies and consumers.

  • Over $29 billion was poured into subsidies and tax breaks from 2009 to 2022.

  • "Dual Credits" policy: Replaced subsidies in 2023, encouraging a market-driven approach while still supporting EVs.

  • Supporting Domestic Manufacturers:

  • Procurement contracts: Early EVs were bought by the government for public transportation, providing revenue and valuable testing data for domestic companies.

  • EV-friendly policies: Cities like Beijing made obtaining licenses easier for EVs compared to gas cars.

  • Local Government Collaboration: Cities like Shenzhen partnered with EV companies (e.g., BYD) to create supportive policies and accelerate growth.

China's strategic approach and substantial subsidies fuelled a booming domestic EV market, making it the global leader in this rapidly growing industry (Yang, 2023).

This is the classic example of a country’s adapting to industrial policy in high-technology industries, which is based on the Strategic-trade theory, which asserts that government intervention can help domestic firms achieve economies of scale and experience in order to become efficient and competitive in global markets (Oatley, 2019).

China’s new tariff law and its retaliation

On April 26, 2024, the National People’s Congress [NPC], China‘s legislature, adopted the Tariff Law of the People’s Republic of China [the “Tariff Law”]. Under the Tariff Law, a tariff Commission under the State Council will have the power to decide to levy anti-dumping duties, countervailing duties, safeguard measures tariffs, and implement other tariff measures decided by the State Council”. In addition, if a country or region adopts trade prohibitions, restrictions, tariffs, or other measures that affect normal trade against China in violation of international treaties or agreements to which China is a party, China implements measures such as retaliatory tariffs against imported goods originating from this country or region (Huld, 2024)

As a result of EU’s tariffs, China has opened an investigation into EU pork and its by-products, a step that appears mainly aimed at Spain, the Netherlands and Denmark after the European bloc imposed anti-subsidy duties on Chinese-made electric vehicles. China may impose provisional anti-dumping measures on pork imports from the European Union as part of a year-long probe that began on June 17, its commerce ministry. China imported $6 million worth of pork, including offal, in 2023, and more than half of that came from the EU, according to Chinese customs data. Though the pork is not equivalent to the EVs trade volume, it's simply a retaliatory gesture of what might develop into a full-on trade war (Mei Mei Chu, 2024)

As the latest development, Beijing wants the EU to scrap plans to impose preliminary tariffs on Chinese electric vehicle imports by July 4.

Environmental implications on Europe’s climate targets

This decision of the EU affects the bloc’s Climate action goal through the European Green Deal. It is the EU’s long-term growth strategy to make Europe climate-neutral by 2050. Making all new cars and vans Zero-emission by 2035 is crucial to Europe becoming the world’s first climate-neutral continent by 2050 (2023). Since tariffs could impact the shift to electric vehicles, they would have negative effects on the climate action plans.


The EU’s imposition of tariffs on Chinese EVs presents a complex situation with far-reaching consequences. While the EU aims to level the playing field against perceived Chinese subsidies and protect its domestic car industry, the move carries significant risks. Affordable EVs are achieving Europe’s clean energy targets. Tariffs could inflate prices, hindering EV adoption and slowing progress towards a greener future. China’s retaliation against EU pork imports signals a potential trade war, disrupting global economic stability in the future. Some European carmakers with investments in China or reliance on Chinese parts suppliers could be negatively impacted by the tariffs. The situation highlights the tension between economic protectionism and environmental goals. A more collaborative approach, potentially involving discussions about fair trade practices and green technology development, might be necessary to achieve both economic and environmental objectives. The coming months will be crucial in determining whether the EU and China can find a solution that avoids a full-blown trade war and fosters a path toward a sustainable automotive future.

(Komal Pooja is a Research Intern at C3S. She is pursuing her Master of Arts in International Relations from Christ Deemed to be University)



Bermingham, F. (2023, October 4). China bites back as EU launches probe into electric vehicle industry. Retrieved from South China Morning Post:

Blenkinsop, P. (2024, June 13). EU hits Chinese EVs with tariffs, drawing rebuke from Beijing. Retrieved from Reuters: transportation/eu-impose-multi-billion-euro-tariffs-chinese-evs-ft-reports-2024-06-12/

Cash, J. (2024, June 17). China opens tit-for-tat anti-dumping probe into EU pork. Retrieved from Reuters:

Chinese EV makers set sights on European production. (2024, May 10). Retrieved from Reuters:

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Commission launches investigation on subsidised electric cars from China. (2023, October 4). Retrieved from European Commission:

Fit for 55: EU reaches new milestone to make all new cars and vans zero-emission from 2035. (2023, March 28). Retrieved from European Commission:

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Mei Mei Chu, J. C. (2024, June 4). China may take provisional anti-dumping steps against EU pork imports. Retrieved from Reuters:

Oatley, T. (2019). Industrial Policy in High-Technology Industries. In T. Oatley, International Political Economy (p. 150). New York: Routledge.

Yang, Z. (2023, Febrauary 21). How did China come to dominate the world of Electric cars. Retrieved from MIT Technology Review:,spending%20to%20improve%20their%20models.


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