EU to protect auto sector with tariffs on Chinese electric cars

The European Commission's introduction of import tariffs of up to 48.1% on Chinese-made electric vehicles (EVs) could help protect long-term steel demand from the EU auto sector.
Tariffs of between 17.4% and 38.1% will be levied on vehicles depending on their manufacturers' level of cooperation with the anti-subsidy investigation, which began last October. The tariffs will apply in addition to the 10% rate already paid on Chinese cars imported into the EU.

The Commission said: “If discussions with the Chinese authorities do not lead to an effective solution, these provisional countervailing duties will be introduced from 4 July as a guarantee (in a form to be determined by customs in each EU Member State). They will only be collected if and when final tariffs are imposed.”

The final vote by EU member states will take place in November. This will determine whether new import duties on electric vehicles will be adopted as a final measure that will apply in the long term.

The EU's proposed tariffs follow the US government's decision to impose a 100% tariff on electric vehicles from China. Under the EU plan, BYD, the world's largest electric vehicle maker, would be subject to a 17.4% tariff. Meanwhile, Geely (maker of Volvo and Polestar cars) faces tariffs of 20%, with MG maker SAIC facing the highest rate of 38.1%. Other "cooperating" OEMs will be subject to a 20% tariff.

Automotive industry: key steel consumption sector
Last month, in its European Steel Review, MEPS International reported on the growing importance of the EU automotive sector to the region's steel industry.

According to Eurofer, the automotive sector accounts for about 17% of steel consumption in Europe. European automakers are the most important market for green steel products produced by steel mills.

The MEPS report states: “The EU Carbon Border Mechanism (CBAM) does not protect against finished products such as cars. Therefore, the use of cheaper steel may continue to provide Chinese imports with a cost advantage. New tariffs aimed at leveling the playing field could be key to long-term growth in steel demand from European automakers."

In recent years, Chinese-made cars have been increasing their share of the European new car market. In 2020, China's global automobile exports amounted to nearly one million units. This year, about six million cars are expected to be exported to more than 140 countries, which will exceed the volumes of the current world leader, Japan. The European Commission believes that the share of Chinese cars in the EU market could rise to 15% by 2025.

A recent study by the Kiel Institute found that an additional 20% tariff on Chinese electric cars would reduce imports by a quarter.