EU Tariffs On Imported Chinese Electric Vehicles Unlikely To Disrupt Market: Fitch Ratings

European Commission tariffs on imported Chinese electric vehicles (EV) are unlikely to disrupt the market, according to a statement from Fitch Ratings released on Friday.

The European Commission announced on Wednesday that it will impose an additional tax of up to 38.1% on EV exports produced in China, starting in early July, as sales of low-priced Chinese EVs have overshadowed European models.

Europe's Chinese EV imports make up less than 4% of sales despite the tariffs, including Chinese-made models of foreign brands such as Volvo, Polestar, and Dacia, Fitch Ratings' data said.

Concerns over China's potential retaliation by implementing broader trade measures threaten mostly German automakers, whose exports to China account for 10% of unit sales on average.

Joint ventures of German and Chinese automakers consequently face issues amid escalated trade tensions, as the cash flow they generate can potentially affect consumer perception in China, resulting in reduced market share of German manufacturers.

In addition to the EU tariff, the Biden administration also raised Chinese EV tariff rate to 100% in the US, with China saying it might file an appeal over World Trade Organization rules. -