China-EU Trade Dispute Escalates over Electric Cars: Temporary Duties and Potential Permanent Tariffs

The European Union has imposed punitive duties on Chinese electric cars, with tariffs of up to 37.6 percent. These tariffs were put in place due to subsidies received by Chinese car manufacturers that the EU considers unfair. The temporary duties are in effect for four months, during which the EU will investigate whether China’s state subsidies to electric car companies have been unfair. If permanent punitive tariffs are imposed at the end of the investigation, they could be valid for five years.

Chinese electric car manufacturers such as Byd, Geely, and SAIC have been assigned varying duty levels based on the investigation. Other brands that cooperated with the EU investigation will face a 20.8 percent duty, while those that did not cooperate will face a 37.6 percent duty. The temporary duties may only be collected if permanent tariffs are imposed.

The situation remains tense as both sides navigate the complexities of international trade. China has threatened to respond with its own restrictions on European products, including agricultural goods, aviation products, and large-engine cars. The EU maintains that its actions are in line with WTO rules and sees no basis for countermeasures. Discussions between China and the EU will continue during the temporary period of the punitive duties.