Brussels validates the massive surcharge on electric cars from China, the future of the automobile market in suspense

This Tuesday, October 29, 2024, Brussels approved a drastic increase in customs taxes on electric vehicles imported from China. Such a measure follows an in-depth investigation into the massive subsidies granted by Beijing to its domestic manufacturers. For Europe, it is a question of industrial survival. While some applaud a necessary move to protect a struggling auto market, others fear overall economic repercussions.

The European Union hits hard

The European Union has taken a major step forward with the announcement of increased taxes on Chinese electric vehicles. This decision follows a year-long investigation into the massive subsidies that Beijing grants to its car manufacturers. Thus, “The European Union is taking a crucial decision for the protection and defense of our commercial interests, at a time when our automobile industry needs our support more than ever,” said declared Antoine Armand, the French Minister of Economy and Finance. In addition to the standard 10% tax applied to all imported vehicles, Brussels has imposed surcharges ranging from 7.8% for Tesla to 35.3% for the Chinese manufacturer SAIC.

This increase in customs duties comes in a context where European manufacturers are struggling to face aggressive competition from Chinese manufacturers. Indeed, the latter, supported by significant subsidies, are capable of offering electric models at prices much lower than those of their European counterparts. For Europe, this decision is therefore seen as a necessity to protect its national companies, despite the risks of commercial reprisals from China. The surcharges should come into force immediately after their publication in the Official Journal of the EU.

A controversial decision that could trigger a trade crisis

While some welcome this measure as a bulwark against unfair competition, others, like the German automobile industry lobby VDA, fear an escalation of trade tensions. “These customs duties are a step backwards for global free trade and therefore for the prosperity, maintenance of jobs and growth of Europe,” denounced VDA in a press release. German manufacturers, already weakened by an internal crisis, believe that these taxes risk leading to higher prices for consumers and compromising the rise of electric vehicles in Europe.

This situation comes as Volkswagen, one of the automotive giants in Europe, is going through a difficult period, with forecasts of thousands of job cuts and the closure of several factories. Brussels' decision, although understandable, could therefore worsen the situation for certain major players in the sector. Ultimately, this measure could lead to a large-scale trade conflict with China, which could slow down the adoption of electric vehicles in the EU. The challenge for Europe will be to find a balance between economic protection and support for the energy transition.

The EU's decision to increase taxes on Chinese electric vehicles represents a decisive step in protecting its auto industry. However, it comes with considerable risks, both for international trade relations and for the industry itself. In addition, China could initiate response measures. If this measure aims to breathe new life into European manufacturers, it could, paradoxically, delay the adoption of green technologies in a context where the energy transition is more necessary than ever.