Chinese carmakers want China to wage tariff war on European cars. Here's why

China hiking tariff on cars imported from Europe could come as a tit-for-tat measure and may deeply impact European brands in the largest vehicle mark
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File photo used for representational purpose.
Car sales
File photo used for representational purpose.

The competition between electric vehicles (EVs) from China and those from European brands is escalating rapidly. And it is now just about products and features any more but has transcended into the realm of global trade spheres. In the aftermath of the European Commission imposing tariff to varying degrees on China-made EVs coming into Europe, Chinese brands are now asking the Chinese government to do a tit-for-tat.

The European Commission had been investigating if Chinese EVs being exported into Europe were benefiting from distortive subsidies in China and thereby helping such brands keep prices low for European customers. Earlier this month, the commission announced tariffs of up to 38.1 per cent on such vehicles in Europe, a move that will likely increase prices of Chinese EVs in various markets of Europe. The move has been slammed not just by Chinese officials but by several European automakers as well.

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A retaliation, apart from strong words, has not yet come from the Chinese government but Chinese automakers want more. According to state-backed Global Times, Chinese car companies have urged Beijing to hike tariffs on cars with combustion engines from European brands that are being sold in China. The move, if successful, could majorly impact European players who are already facing enormous competition in China, the world's largest car market as well as the largest EV market in the world.

How can China hiking tariff impact European car brands?

At present, China imposes a 15 per cent tariff on cars imported into the country from foreign markets. The Chinese vehicles' market is vibrant where global brands have to compete with not just one another but also a long list of local players who mostly offer products at competitive prices.

Hiking import tariff on imported cars will drive up prices of vehicles from global brands which, in turn, could make local products even more feasible for potential customers here.

This is exactly the fear brands like Mercedes, Volkswagen and BMW had expressed when criticising the European Commission move to impose tariff on Chinese cars.

(With inputs from Reuters)

First Published Date: 19 Jun 2024, 11:19 AM IST
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