The European Union is turning up the heat on Chinese electric vehicles (EVs) with hefty tariffs ranging from 17.4% to 37.6%. This move aims to protect the EU auto industry from what it deems as unfair competition due to “illegal subsidisation” by Beijing. The tariffs, effective immediately, will significantly impact major Chinese automakers like BYD, Geely, and SAIC.

The EU’s decision follows an investigation that found Chinese EV makers benefit from state support, allowing them to undercut European competitors. This is seen as a threat to the EU’s automotive sector, which is heavily investing in its own green technologies. European Commission President Ursula von der Leyen emphasized the need for a level playing field to ensure Europe’s competitiveness and green industrial leadership.

Reactions within the EU are mixed. While some officials support the move to protect domestic industries, others, like Sweden’s prime minister and Germany’s chancellor, warn it could spark a trade war and harm EU companies relying on Chinese imports. Hungary’s government has strongly opposed the tariffs, labeling them as overly punitive.

Industry voices, including German car giant Volkswagen, have expressed concerns about the negative repercussions of these tariffs. They argue that the long-term impact could hurt the EU’s EV adoption and overall competitiveness, given the dependency on Chinese components like EV batteries.

Despite these concerns, the EU’s trade chief, Valdis Dombrovskis, remains hopeful that ongoing discussions with China could lead to a mutually beneficial solution. The goal is to ensure fair competition without resorting to retaliatory measures that could escalate tensions further.