The European Commission has announced it will impose additional tariffs of up to 38.1% on Chinese Battery Electric Vehicles (BEV) from July on grounds that they were causing economic injury to European Union (EU) producers.

As part of its ongoing investigation, the Commission has provisionally concluded that the Chinese BEV value chain benefited from unfair subsidization. It has reached out to Chinese authorities to discuss these findings and explore possible ways to resolve the issues identified in a manner compatible with World Trade Organization rules.

China criticized the ‘protectionist’ move, with a government spokesman calling on the EU to stop politicizing economic and trade issues and instead handle frictions through dialogue. “China will take all measures necessary to defend our lawful rights and interests firmly.”

The European Commission said if discussions with Chinese authorities do not lead to an effective solution, the provisional countervailing duties would kick in from July 4, 2024. They would be collected only if and when definitive duties are imposed.

The individual duties the Commission would apply to the three sampled Chinese producers would be BYD (17.4%), Geely (20%) and SAIC (38.1%). Other BEV producers in China, which cooperated in the investigation but have not been sampled, would be subject to an average duty of 21%.

All other BEV producers in China that did not cooperate in the investigation would be subject to a duty of 38.1%.

Following a substantiated request, the Commission said one BEV producer in China – Tesla – may receive an individually calculated duty rate at the definitive stage.

The EU move comes a month after the U.S. announced stiff tariff hikes on EVs, batteries, and solar cells originating from China. The tariffs on Chinese EVs will increase from 25% to 100% in 2024.

The U.S. contended that with substantial subsidies and non-market interventions exacerbating the risk of oversupply, China witnessed a 70% surge in its exports of EVs from 2022 to 2023, threatening productive investments in other regions.

In April this year, China petitioned the WTO for dispute consultations with the U.S. about tax credits under the country’s Inflation Reduction Act to promote renewable energy and the production of EVs.