The European Commission is due to notify Chinese electric-vehicle manufacturers of provisional tariff levels Wednesday and companies could face additional levies of around 25%, European officials said.
A person familiar with the discussions in Brussels said that the numbers aren’t yet finalized. Officials from several member states said they were expecting the tariffs to be 25% and some companies could face even higher import costs.
The European Commission, the bloc’s executive arm, launched an investigation into Chinese subsidies for electric vehicles last year and the tariffs are expected to be implemented around July 4.
China has already signalled it’s ready to retaliate, threatening measures across agriculture, aviation and cars with large engines. Beijing has already launched an investigation into some types of European liquor and an outcome could come soon.
“The anti-subsidy probe is typical protectionism,” Chinese Foreign Ministry spokesman Lin Jian said at a regular briefing in Beijing on Wednesday. “China will take all measures necessary to defend our lawful rights and interests.”
Shares connected to Chinese electric vehicle makers have declined in Hong Kong ahead of the EU decision. Geely Automobile Holdings Ltd. and Xpeng Inc. fell around 8% this week while sector leader BYD Co. lost about 3%.
The investigation is part of a broader EU effort to protect supply lines and bring production closer to home, particularly in key sectors like semiconductors and pharmaceuticals. The investigation has tested already fragile relations with Beijing, which subsequently launched its own anti-dumping investigation into brandy imported from the EU, a move seen as a retaliation against France, which supported the electric-vehicle probe.
While the probe targeted Chinese automakers such as BYD and Geely, the higher rates — up from a current 10% — will hit a range of Western carmakers too, led by Tesla Inc., which ships the Model 3 from Shanghai to Europe, as well as BMW AG and Renault SA. The current charge on passenger car imports from Europe to China is 15%.
The measures come as the bloc walks a tightrope on protecting the region’s car industry with millions of well-paid jobs as well as a green agenda heavy on removing CO2 from transportation. The EU’s EV ambitions, with an effective combustion-engine sales ban for new cars by 2035, have run into trouble in recent months after markets like Germany removed buying incentives.
