The EU plans to reduce tariffs on Chinese-made Tesla cars to 9%
The EU plans to reduce the additional tariffs on Tesla cars imported from China to 9%, lower than the expected 20.8%. In addition, other manufacturers face tariffs of 36.3%, 19.3%, and 17% respectively. These tariffs will be levied on top of the 10% tariffs already paid by Chinese exporters. Tesla's stock price rose 1.73% in pre-market trading. All parties are required to provide comments on the proposal by August 30, and the final regulations will be announced by October 30. The tariffs will last for 5 years and may be extended. Negotiations are still ongoing to find other WTO-compliant solutions
According to the Wisdom Financial APP, the European Union on Tuesday disclosed the latest move to resist China's subsidies to the electric car industry, which is the decision draft to impose final anti-subsidy taxes on pure electric cars imported from China. The EU plans to impose an additional 9% tariff on Tesla cars (TSLA.US) imported from China, lower than the previously expected 20.8%. MG manufacturer SAIC Group, Volvo's parent company Geely, and BYD will face additional tariffs of 36.3%, 19.3%, and 17% respectively, all slightly lower than the previously announced levels.
Officials stated that they will continue to negotiate with manufacturers before member states vote on the tariffs to be implemented in November.
Other companies that cooperated with the EU investigation but were not sampled by investigators will be subject to a 21.3% tariff, while non-cooperative manufacturers will face a 36.3% tariff. These rates will be imposed on top of the 10% tariff already paid by Chinese exporters.
For Tesla, the 9% tariff is relatively good news as it is lower than the tariffs faced by other manufacturers. EU officials stated that one factor behind this calculation is that the Chinese government seems to have reduced subsidies to foreign companies.
EU officials mentioned that Tesla receives most of its benefits by providing batteries at prices below market value. In addition, the company also receives land use rights, income tax exemptions, and various forms of subsidies, including national subsidies available to all export producers.
As of the time of writing, Tesla rose 1.73% in pre-market trading to $226.54, with the stock down 10% for the year.
All parties must provide comments on the proposal and request a hearing by August 30. If a majority of binding voting member states do not block it, the European Commission will announce the final regulations on tariffs by October 30. These tariffs will last for 5 years and may be extended after a review.
In recent months, the EU and China have been holding talks to explore whether another solution can be found. The EU stated that any such solution must comply with the rules of the World Trade Organization (WTO) and address the fundamental issue of subsidies.
Several member states, including Germany and Hungary, have expressed resistance to the tariffs, but blocking the tariffs would require a majority of member states to do so.
The EU also stated on Tuesday that it plans to give lower tax rates to joint ventures that did not export during the investigation period. These companies will face the same tax rates as their corporate partners.
The EU had requested target companies to provide guarantees for provisional tariffs, but officials said the EU will not retroactively collect these tariffs. Officials mentioned that the tariff rates could still change before being finalized