EU wants to impose new tarrifs on car imports from China. Dacia Spring, affected by this measure

The EU is moving closer to imposing new customs duties on car imports from China. Dacia Spring could become more expensive.

The European Commission plans to begin customs registration of vehicle imports from China. Consequently, these imports could face additional taxation if a commercial inquiry launched in September 2023 reveals that they benefit from government subsidies distorting the market.

In mid-September of last year, Ursula von der Leyen, President of the European Commission (EC), announced the initiation of an investigation into subsidies received by Chinese car manufacturers. The EC chief stated then that the global market is flooded with cheap Chinese cars, artificially priced down due to massive state subsidies. She emphasized that such distortion of the market, whether internal or external, is unacceptable to the EU.

“Europe is open to competition. Not to leveling down,” she added, stressing the need to defend against unfair practices while maintaining open lines of communication and dialogue with China.

The ongoing investigation is expected to conclude by November of this year. However, based on preliminary findings, the EU could impose provisional taxes as early as July 2024.

In a document published this week, the EC noted that it possesses sufficient evidence suggesting that electric vehicles produced in China have been subsidized by the state, with their imports increasing by 14% since the official launch of the investigation.

Customs registration will commence on the day following the publication of the plan in the Official Journal of the EU.

Chinese officials responsible for commercial relations with the European Union immediately expressed disappointment with this potential measure, arguing that the surge in imports of Chinese cars reflects the growing demand in Europe for such vehicles.

A decision to impose customs duties on car imports from China, especially on electric vehicles subsidized by the state, could pose significant challenges not only to Chinese brands such as BYD, Aiways, Nio, or Xpeng but also to European manufacturers collaborating with Chinese companies to assemble cars in Asia for sale in the European market. In this scenario, even the Dacia Spring model could suffer, as well as vehicles from brands such as BMW, Volvo, or Tesla.

Furthermore, as some leaders of major European automotive groups have mentioned in recent months, the imposition of customs duties by the EU could trigger similar measures from the Chinese government. On the other hand, imposing these duties could compel Chinese manufacturers to build factories in Europe or in states with which the EU has free trade agreements. Already, the Chinese group BYD, which surpassed Tesla last year to become the global leader in electric vehicle sales, recently announced plans to build a car factory in Hungary to support its European offensive.