The European Union has imposed provisional countervailing duties of up to 38.1% on electric vehicles (EVs) imported from China to counter state-funded subsidies that distort the internal market. According to the European Commission, these measures follow an anti-subsidy investigation concluding that Chinese EV producers benefit from unfair financial advantages, threatening the viability of EU automotive manufacturers.
EU Imposes Provisional Tariffs on Chinese EVs
The European Commission announced in July 2024 that it would apply provisional duties on imports of battery electric vehicles (BEVs) from China. These tariffs are added to the existing 10% car import duty. Specific rates vary by manufacturer: BYD faces an additional 17.4%, Geely 19.0%, and SAIC 37.6%. The Commission stated these steps are necessary to ensure that companies competing in the EU market operate under fair conditions.
The Federation of German Industries (BDI) has expressed concern over the potential for a trade war. In official statements, the BDI warned that retaliatory measures from Beijing could harm German exports in other sectors, particularly machinery and automotive parts, given China’s role as a critical trading partner for Germany.
BASF and the Shift in Global Chemical Production
The trade tension coincides with a strategic pivot by BASF, the world’s largest chemical company. BASF is significantly reducing its footprint in Europe, specifically at its Ludwigshafen site, while aggressively expanding in China. According to BASF’s corporate reports, the company is investing billions in a new Verbund site in Zhanjiang, China, to capitalize on lower energy costs and closer proximity to the fastest-growing chemical market.
This divergence highlights a growing gap: while the EU seeks to protect its industrial base through tariffs, major European firms are moving capital to Asia to maintain competitiveness. The BDI describes this environment as “unfair competition,” where European firms face higher energy costs and stricter regulations than their Chinese counterparts.
China’s Response and the Risk of Retaliation
China’s Ministry of Commerce (MOFCOM) has labeled the EU’s tariffs as “protectionist” and “contrary to multilateral trade rules.” According to MOFCOM, Beijing has initiated its own anti-dumping investigations into EU exports, specifically targeting pork and dairy products. These moves are widely viewed as strategic pressure points intended to force EU member states to disagree on the EV tariff implementation.
Comparative Impact: EU vs. China Trade Strategy
| Focus Area | European Union Strategy | China Strategy |
|---|---|---|
| EV Market | Imposing countervailing duties to protect domestic OEMs. | Aggressive export expansion fueled by state subsidies. |
| Industrial Base | Attempting “de-risking” while maintaining trade ties. | Building self-sufficiency and dominating green-tech supply chains. |
| Trade Tool | Anti-subsidy investigations and tariffs. | Targeted retaliatory probes (e.g., pork, brandy). |
The Future of EU-China Industrial Relations
The coming months will determine if the EU and China can reach a price-undertaking agreement, where Chinese manufacturers agree to sell cars at a minimum price to avoid tariffs. However, the fundamental disagreement over “industrial overcapacity”—a term used by the EU and US to describe China’s production levels exceeding global demand—remains unresolved.
As BASF continues its migration of production capacity toward Asia and the EU implements trade barriers, the risk of a fragmented global trade system increases. The outcome will likely depend on whether the EU can accelerate its own green transition to compete on technology rather than relying solely on protectionist duties.
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