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More and more countries are imposing the trade measure
The number of countries implementing or considering tariff imports on electric vehicles (EVs) from China is on the increase, with the US and EU at the forefront of imposing stricter trade policies.
In a report released amid the EV tariff furore this week, the International Energy Agency (IEA) said that tensions and trade-offs between the goals of energy and industrial policies mean that getting policy measures right is essential for clean energy transitions.
In the 2024 edition of its Energy Technology Perspectives, the IEA said that tariffs on clean energy technologies and materials have increased in the major economies in recent months and years.
This is “with the aim of counteracting the effect of financial support mechanisms in exporting countries that are perceived as unfair and detrimental to the maintenance of a level playing-field.”
“The recent hike in tariffs in the US, Canada and EU on EV imports from China are the most prominent examples of this,” said the IEA.
Pressure mounts on EV imports from China
On Wednesday, the EU implemented tariffs, of up to 45.3% (this includes the standard 10% car import duty), on Chinese-imported EVs, arguing that Chinese subsidies hurt competitiveness at home. This measure was taken, the European bloc said, after failed negotiations.
In July, the EU imposed a provisional anti-subsidy tariff of up to 37.6% on EVs imported from China.
Said China’s Ministry of Commerce in response: “China does not agree with it and will not accept the ruling.”
The Chinese government sees the EV tariffs as forms of discrimination and protectionism designed to contain its development.
China to fight tariffs on EVs
In response to the EU, China said earlier in October that it does not recognise nor does it accept the EU’s final ruling on the anti-subsidy investigation into China-made EVs.
State media reported that the country had lodged a complaint at the World Trade Organisation (WTO) Dispute Settlement Body.
The reports noted that the Chinese side “is committed to taking all necessary measures to firmly safeguard the legitimate rights and interests of Chinese companies.”
The IEA’s Energy Technology Perspectives highlighted that several Latin American countries had also followed the US and EU example, with Mexico, Chile and Brazil announcing tariff increases on Chinese steel in Q2 2024 and other countries in the region considering similar tariff hikes.
Chinese EV manufacturers report growth
Chinese state media reported yesterday (Thursday, 31 October) that several Chinese EV companies have reported an “impressive revenue growth in the third quarter, showing that protectionist moves in overseas markets will not hinder China’s EV development.”
In a filing with the Hong Kong Stock Exchange on Thursday, Li Auto said that its total revenue for the third quarter reached 42.9 billion yuan ($6.1 billion), a year-on-year increase of 23.6%.
This comes after BYD, another Chinese EV company, reported its third-quarter earnings on Wednesday, which revealed revenue of 201.125 billion yuan ($28.25bn), a 24.04% increase compared with the same period last year.
US plays hardball
In May, US President Joe Biden announced a set of new trade tariffs on Chinese imports, including for EVs, lithium-ion batteries, certain types of magnets, critical minerals, steel, and aluminium.
In response, China’s Commerce Ministry urged the US to “immediately cancel the additional tariffs on Chinese products.”
The country vowed to take “resolute measures to defend its rights over the US announcement to increase tariffs on Chinese products including electric vehicles (EVs).”
It called the measures an “ill-conceived campaign to crack down on emerging Chinese industries that are gaining global prominence.”
The Carnegie Endowment for International Peace organisation said the tariffs, which also include products in the medical and infrastructure sectors, come amid US concerns about Chinese manufacturing “overcapacity.”
“Policymakers in Washington fear high Chinese production levels are stifling US efforts to expand domestic production of green goods, whether finished products, like solar panels or EV batteries, or inputs like processed minerals. The tariffs will undoubtedly impact US efforts to develop an EV manufacturing base, with potential ripple effects into clean energy.”
The organisation said that tariffs will undoubtedly impact US efforts to develop an EV manufacturing base, with potential ripple effects into clean energy.
It said the US’s clean tech tariffs will almost certainly have global impacts.
Tariffs on EVs detrimental to developing economies
In August, the WTO said the use of escalating tariffs in EV production chains could be a factor “preventing developing economies from diversifying their exports and moving up the value chain.”
“Tariffs on products related to the EV value chain can vary across different processing stages and between economies. In general, the tariffs on battery packs and EVs are considerably higher than those on raw minerals and battery minerals, with a clear pattern of tariff escalation moving up the value chain.”
The WTO said that developed economies tend to have lower tariffs across all stages of the EV value chain.
“However, their tariffs rise across the supply chain, with the highest tariffs applied to processed and finished goods. This potentially hinders the ability of developing economies to move up the value chain.” |
