Unfair Play: How Import Tax Increases on Chinese Electric Vehicles Will Affect the US and Europe Differently

The US and Europe have both increased import taxes on Chinese electric vehicles, but the outcomes of this policy change are expected to differ significantly. The US announced a substantial increase in import tax on Chinese electric vehicles from 27.5% to 102.5% on May 14. The goal behind this decision is to counteract what is perceived as China’s unfair practices and subsidies in the industry. The intended outcome is to create a level playing field for automakers and American workers.

A month later, Europe followed suit with a similar move. The European Commission made a preliminary announcement on June 12 indicating that the Chinese electric vehicle value chain was benefiting from unfair subsidies, which was negatively impacting EU competitors. Consequently, the EC proposed new tax rates for the three Chinese domestic electric vehicle companies with the largest market shares in Europe, including BYD, Geely, and SAIC. These companies will now be subject to tax rates of 17.4%, 20%, and 38.1%, respectively, up from a general tax rate of 10%.

While both the US and Europe have increased import taxes on Chinese electric vehicles, analysts predict that the impact will vary significantly. In the US, there are hardly any major Chinese electric vehicle companies selling their products officially in the market. This means that the immediate effects of the increased import tax may not be substantial as there are limited Chinese electric vehicles entering the country. However, there are concerns that Chinese firms may choose to produce in Mexico to circumvent the tax increases.

On the other hand, the European market is more open to Chinese electric vehicles, and the impact of increased tax rates is expected to be less severe compared to the US. Consumers in Europe are still adjusting to Chinese brands, but the market remains receptive to these electric vehicles. Despite the tax increases, Chinese car manufacturers may still be able to navigate