The European Union has decided to increase tariffs on Chinese-built electric vehicles to as much as 45.3 percent, at the end of its highest profile investigation that has divided Europe.

Just over a year after launching its anti-subsidy probe, the European Commission will set out extra tariffs ranging from 7.8 percent for Tesla to 35.3 percent for China's SAIC, on top of the EU's standard 10 percent car import duty.

The extra tariffs were formally approved and published in the EU's Official Journal on Tuesday, meaning they will take effect on Wednesday. The Commission, which oversees EU trade policy, has said tariffs are required to counter what it says are unfair subsidies including preferential financing and grants as well as land, batteries and raw materials at below market prices.

It said China's spare production capacity of 3 million EVs per year is twice the size of the EU market. Given 100 percent tariffs in the United States and Canada, the most obvious outlet for those EVs is Europe.

The Commerce Ministry said China "does not approve of or accept" the move, according to Xinhua News Agency.

A ministry spokesperson added that Beijing has already appealed to the World Trade Organisation's dispute settlement mechanism over the issue, and will continue to take all necessary measures to safeguard the legitimate rights and interests of Chinese enterprises.

The China Chamber of Commerce to the EU said it was profoundly disappointed by the "protectionist" and "arbitrary" EU measure and was disheartened by the lack of substantial progress in negotiations to find an alternative to tariffs.

Beijing has launched its own probes this year into imports of EU brandy, dairy and pork products.

The extra taxes have been controversial, with strong opposition from Germany and Hungary amid fears that it may set off a trade war. Beijing previously slammed the European Union's "unfair" and "unreasonable protectionist practices" during the probe.

"By adopting these proportionate and targeted measures after a rigorous investigation, we're standing up for fair market practices and for the European industrial base," EU trade chief Valdis Dombrovskis said in a statement.

"We welcome competition, including in the electric vehicle sector, but it must be underpinned by fairness and a level playing field," he said.

But Germany's main auto industry association warned the tariffs heighten the risk of "a far-reaching trade conflict".

The extra tariffs are "a step backwards for free global trade and thus for prosperity, job preservation and growth in Europe," the German Association of the Automotive Industry's president Hildegard Mueller said after the announcement.

European automakers are grappling with an influx of lower-cost EVs from Chinese rivals. The Commission estimates Chinese brands' share of the EU market has risen to 8 percent from below 1 percent in 2019 and could reach 15 percent in 2025.

It says prices are typically 20 percent below those of EU-made models.

It remains to be seen what impact tariffs will have on consumer prices. Some producers may be able to absorb them at least partially.

Talks continue between the EU and China and the duties can be lifted if they reach a satisfactory agreement, but officials on both sides have pointed to differences.

In the first nine months of 2024, China's EV exports to the EU were down 7 percent from a year earlier, but they have surged by more than a third in August and September, ahead of the tariffs, data from the China Passenger Car Association (CPCA) show. (Agencies)
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Last updated: 2024-10-30 HKT 15:59