The European Commission introduced an import duty on electric cars for the first quarter of 2021 under one of its measures to prevent EU companies from claiming unfair competition. While there were concerns China- subsidised electric vehicles were distorting fair competition at the end of 2023, it was only in October of that year the Commission introduced this ex-officio anti-subsidy investigation.
This follows a move by the European Commission and the Biden administration to impose tariffs on electric vehicles from China and related components which are part of wider efforts to crack down on beijing over what are generally viewed as unfair trade practices such as the allegation of promoting intellectual property theft and market-rigging through state subsidies. While these tariffs can divert some potential supply to other countries so long as, no rise in demand, they also serve as both a reminder of the current hostility in global trade relations to the importance of the nascent electric vehicle sector.
This would put stricter environmental regulation pressure on the automobile industry and is planned to bring down the CO2 emissions from vehicles. Electric vehicles are crucial for the goals, and so the European Union cannot take this lightly: it must protect its domestic industry by defending it from unfair practices but also by permitting fair competition and innovation. It is likewise noted, that the Commission has demonstrated a clear and established commitment to working constructively with China towards finding solutions in compliance with the WTO framework, setting in stone its intent to resolve trade tensions through established international frameworks.
Multiple stakeholders across the automotive industry, from manufacturers to legislators, are busily keeping an eye on how the import taxes might impact supply chains, pricing, and market characteristics in the sector. The talks between the European Union and China’s responses will determine how a rulebook for future global electric car trade and its regulations.
