European automakers’ stocks dropped on Wednesday after a business group in Brussels said the Chinese government might raise tariffs on cars made in Europe and the US.
People close to the China Chamber of Commerce to the EU (CCCEU) told them in a letter to the press on Tuesday evening that “China may consider increasing temporary tariff rates on imported cars equipped with large-displacement engines.”
Shares of car companies on the STOXX Europe 600 Automobile & Parts Index XX:SXAP fell 1.9% on Wednesday. So far this year, they have gained 4%. VW VOW, -0.79% stock fell 1% on Wednesday, while BMW BMW, -1.73% stock and Mercedes-Benz Group MBG, -0.94% stock both fell 2%.
In 2018, Bank of China, COSCO Shipping, and China Three Gorges Corporation, all of which are owned by the Chinese government, set up the CCCEU.
The business group based in Brussels pointed to an interview with Liu Bin, an expert on cars for the Chinese government, who said that the Beijing government could raise tariffs by up to 25% in line with WTO rules.
The higher tariffs would be aimed at “imported gasoline sedans and sport utility vehicles that have engines larger than 2.5 liters,” Liu said in an interview with the Beijing-backed tabloid The Global Times.
Liu, who is the head expert at the China Automotive Technology & Research Center right now, said that the tariff increases would help China meet its climate goals by lowering the number of cars it imports that are made in other countries.
Liu told The Global Times, “We also saw that some countries and regions have put limits on the new-energy vehicle sector. These actions go against the idea of green development and are against market economy principles and WTO rules.”
President Joe Biden said on May 14 that the U.S. would raise tariffs on electric vehicles from 25% to 100% in order to “protect American manufacturers from China’s unfair trade practices.” This is when Liu spoke out.
At the White House, they said, “This action furthers President Biden’s vision of making sure that the future of the auto industry will be made in America by American workers.”
