The European Commission is considering reducing tariffs on Chinese-made electric vehicles for carmakers Volkswagen and BMW.
The European Commission is considering cutting tariffs on Volkswagen and BMW models made in China from 37.6% to 20.8%. The move could make models from both companies more competitive in Europe. The revision comes as the German auto industry worries about retaliation from China. The Commission is seeking to balance protection of local industry with international cooperation, and is expected to finalize its decision by the fall.
Towards a rate of 37.6% to 20.8% of customs duties?
The European Commission, in its role as regulator of the Union’s trade policies, regularly analyses customs duties to ensure that they meet Europe’s economic and strategic interests. According to sources close to the matter relayed by Automotive News, Commission could classify Volkswagen and BMW as “cooperating undertakings”This classification would allow the two German manufacturers to benefit from reduced customs duties of 20.8% on their models manufactured in China, against a planned rate of 37.6%.
The tariff revision comes at a critical time when Europe is seeking to strengthen its trade ties while protecting its local industry. The prospect of reduced tariffs reflects a willingness to compromise to balance international competition with the interests of European manufacturers.
Two models are particularly affected by this potential decision, but they are far from the only ones: BMW’s electric Mini, made in China, and Volkswagen’s Cupra Tavascan, produced at the group’s plant in Anhui.
These vehicles are subject to the highest tariff, but this could well change. If the European Commission decides to apply reduced customs duties, These models could become more competitive on the European market.
What are the motivations of the European Commission?
The German automobile industry, which achieves a significant share of its sales in Chinais concerned about the impact of high customs duties. Indeed, in 2023, German manufacturers generated a third of their turnover in Chinawhich clearly shows the strategic importance of this market. The possibility of retaliation from China in the event of high tariffs in Europe is a major concern for companies such as Volkswagen and BMW.
If China decides to impose a surcharge on vehicles imported from Europe, German manufacturers could lose out because their vehicles would become much less competitive at a time when Chinese manufacturers are waging a price war. There is no question of European brands losing the market, which is why they are entering into negotiations with the European Commission.
In addition, the industry is closely watching similar requests from other manufacturers, such as Tesla, which has requested specific customs duties for its Model 3 exported from Shanghai. Europe is clearly between two stools…
It must strike a balance between protecting the internal market and international cooperation. Brussels has until the autumn to finalise its decision on the customs duties, which are for the moment preliminary.
Source: www.autoplus.fr
