A trade war between Brussels and Beijing is brewing as the European Union moved to raise tariffs on Chinese electric vehicles (EVs) on Wednesday.
The imports of Chinese-made EVs to the bloc, including from Western brands with plants in the Asian country, have skyrocketed in recent years.
But Brussels believes Chinese automakers including BYD and SAIC are increasing market share and undercutting European car brands on price thanks to the subsidies they receive from Beijing.
The planned tariffs will see China‘s automakers facing additional duties between 17.4 percent and 38.1 percent – depending on the company.
This spike will be added to the existing EU tariff of 10 percent, taking the highest overall duties close to 50 percent.
The new rate will take effect on a provisional basis by July 4, unless Beijing and Brussels can settle their dispute and find an agreement to stave off a trade war.
The Commission’s decision comes after an investigation launched in October by the Commission into the state support provided by the Chinese government to the country’s electric vehicle makers.
The Commission said its investigation had provisionally concluded that the EV industry in China “benefits from unfair subsidisation, which is causing a threat of economic injury”.
A similar probe is being carried out by the EU on Chinese wind turbine companies and solar panel suppliers.
China’s Ministry of Commerce was quick to respond to the Commission’s announcement and hit out at the tariffs, accusing the bloc of “creating and escalating trade tensions”.
Similarly, Chinese Foreign Ministry spokesperson Lin Jian, attacked the Commission’s investigation as “typical protectionism”, adding Beijing would “take all measures necessary to protect our legitimate rights and interests”.