Already a subscriber? Make sure to log into your account before viewing this content. You can access your account by hitting the “login” button on the top right corner. Still unable to see the content after signing in? Make sure your card on file is up-to-date.

Officials within the European Union have warned that they will hike tariffs on Chinese electric vehicles (EVs) on July 4 unless Chinese officials agree to address subsidies that the EU claims are manipulating its auto market.

The European Commission warned it would raise tariffs on Chinese carmakers to 38%, a significant increase from the current 10%. This dispute over EVs is the latest in a series of trade conflicts between the EU and China, mainly focusing on green technologies.

This development comes after an EU investigation revealed serious concerns over China’s state support for its automakers, which have benefited from the current 10% tariff—a rate much lower than those imposed by countries like the US or India. The commission claims that Chinese EVs are about 20% cheaper than European models, contributing to a sharp increase in imports, which rose from 57,000 units in 2020 to over 437,000 in 2023. Chinese brands such as BYD and SAIC have been gaining market share, bolstered by substantial subsidies that allow them to undercut European competitors in terms of price.

Despite widespread support among most nations, there has been some pushback from some countries and automakers. Ola Kaellenius, CEO of Mercedes-Benz, expressed concern that imposing tariffs could kick off a trade war with China and hurt their brand.

German Transport minister Volker Wissing said, “The European Commission’s punitive tariffs hit German companies and their top products. Cars must become cheaper through more competition, open markets and significantly better business conditions in the EU, not through trade war and market isolation.”