EU moves from higher tariffs to minimum acceptable price level for import of Chinese electric cars

Increased duties on Chinese electric cars, which came into effect in the European Union following an antitrust investigation, increase the cost of some brands of cars when imported into the region by 45%. The possibility of switching to other methods of market regulation was included from the start, and now the parties have begun negotiations on minimum acceptable prices.

Image source: Stellantis

As it became known this week, the European Commissioner for Trade Maroš Šefčovič held talks with the Chinese Minister of Trade Wang Wentao, following which the parties decided to consider a scheme for regulating the import of Chinese electric cars to the European Union using minimum acceptable prices set in the region. It was decided to start negotiations on this topic immediately, since the European market is important for Chinese car manufacturers. The European authorities insist that minimum acceptable prices should be as effective and applicable as import duties.

The EU has already applied a similar principle of trade regulation to more homogeneous product categories, not as complex as cars. Currently, import duties on Chinese electric cars in the EU depend heavily on the brand of the specific vehicle. For example, while BYD products are limited to an additional duty of 17%, and Geely – 18.8%, SAIC has to pay an additional 35.3% on top of the standard 10% duty for all imported cars. In turn, China has introduced higher duties on French cognac, putting the business of European winemakers at risk.

It is noteworthy that German automakers also opposed the introduction of higher duties on Chinese electric cars, as they feared retaliatory measures from China, the largest market on the planet, where they receive a third of their revenue. The European auto industry welcomed the news about the start of negotiations with China to abandon the higher duties. Since the beginning of this year, imports of Chinese electric cars to Europe have fallen to a two-year low, so Chinese suppliers are interested in the emergence of fairer methods of market regulation in the region.