China Escalates Countermeasures in Response to EU Electric Vehicle Tariffs

China has intensified its response to the European Union's new countervailing duties on battery electric vehicles (BEVs) originating from China, highlighting growing trade tensions between two major economic blocs.

Beijing is now weighing an increase in tariffs on large-displacement fuel vehicles imported from Europe, a significant move given the EU’s status as a leading exporter of high-displacement cars to China. According to China’s Ministry of Commerce, approximately 88,000 such vehicles with engine displacements over 2.5 liters were imported from Europe in the first seven months of this year alone.

Duties Target Major Chinese EV Producers

This escalation follows the EU's recent decision, enacted on October 4, to approve five-year tariffs on BEV imports from China, impacting the market for Chinese automakers. BYD, China’s largest new energy vehicle producer, will face a tariff rate of 17%, consistent with the EU's initial August proposal. Geely, another major player, saw its duty set at 18.8%, slightly down from an earlier proposed 19.3%. State-owned SAIC will face a significantly higher tariff of 35.3%, slightly reduced from an initial 36.6%. Notably, US-based Tesla, which manufactures in China for export, will contend with a 7.8% duty, down from a previously proposed 9%.

The Ministry of Commerce has indicated that it will continue to negotiate with EU counterparts but asserts it is prepared to take "firm" actions to protect Chinese commercial interests. BYD’s rapid expansion in the European market, selling over 23,000 BEVs between January and August—a doubling of last year’s figures—demonstrates China’s foothold in the region. Tesla, meanwhile, sold roughly 198,000 units in the same period, marking a 16% decrease from the previous year.

Tensions Expand Beyond the EU

China's retaliation isn’t limited to the EU alone. The country has launched a complaint with the World Trade Organization against Turkey over its recent imposition of a 40% tariff on Chinese EVs, a measure Turkish President Recep Tayyip Erdogan introduced to stimulate Turkey's domestic electric vehicle market.

China has additionally undertaken countervailing and anti-dumping investigations into a variety of EU exports, including dairy products and pork. On October 8, Beijing imposed provisional anti-dumping duties on brandy imports from Europe, underscoring China’s readiness to diversify its retaliatory measures across multiple sectors.