- Chinese automakers’ large profit margins will allow them to absorb potential European tariffs, report claims
- Euro tariffs are expected to come in at 30 percent, but experts think automakers could cope with almost 50 percent levies
- Regulators are expected next week to decide on what action to take
European regulators are poised to slap big tariffs on Chinese auto imports to give local brands a fighting chance, but now some experts say it won’t make a difference. They think Chinese carmakers are so efficient, and their profit margins so massive, that they’ll easily be able to absorb the financial penalties and still deliver bargain-priced EVs to European customers.
Lawmakers in Europe are concerned that state subsidies are giving Chinese brands an unfair economic advantage as their cars have begun arriving in large numbers. They have been investigating the situation since the beginning of this year. They’ve visited Chinese factories and are expected to make a decision next week about what tariffs to introduce.
Related: EU Tariffs On Chinese EVs Could Cost Beijing $4 Billion In Trade
Analysts expect Europe to announce a 30 percent tariff, but experts said to Auto News that this kind of levy simply won’t be enough to reduce the number of Chinese EVs arriving in Europe. Chinese automakers’ huge margins could easily handle that kind of tariff, the report says, and the buyer won’t notice any difference in pricing, although the automakers themselves would be generating less profit.
The analysts suggest that tariffs would have to be as high as 50 percent before they began to throw the Chinese import juggernaut off course.
But that’s not a view held by everyone in the car industry. A recent study from the Kiel Institute for the World Economy predicts that approximately $3.8 billion worth of EVs from China will no longer be imported into Europe if the EU hits Chinese EV imports with 20 percent tariffs.
That $3.8 billion could translate as around 125,000 fewer Chinese EVs landing in the bloc, which some experts think would boost sales of domestically produced electric vehicles by as much as $3.3 billion. China is likely to retaliate in kind if the EU does apply tariffs, and hit European cars exported there with new taxes.