In response to the Biden administration's recent imposition of a 100% tariff on various Chinese goods, including electric vehicles (EVs), China has retaliated by threatening tariffs on its own vehicle imports. Notably, these threats also extend to the European Union (EU), as China's Ministry urges Europe not to follow in the footsteps of the United States. The escalating trade tensions among China, the EU, and the US, particularly concerning imported EVs, have raised concerns over the future of international trade relations.

China, being a global leader in battery electric vehicle (BEV) technology and boasting the most saturated market for New Energy Vehicles (NEVs), has been expanding its presence in new regions, including Europe. Renowned automakers such as NIO, XPeng, BYD, and ZEEKR have successfully introduced multiple BEVs in EU countries, offering advanced technology and luxurious features at competitive prices. This surge in EV exports has even led to a shortage of shipping vessels to accommodate the high demand.

However, the influx of Chinese EVs has unsettled local EU automakers, some of whom have been slower to adopt EV technology. In response, the European Commission launched a probe into the Chinese automakers, eventually determining that they had been unfairly subsidized for their exports into the region. As a result, Europe has threatened to impose tariffs on imported vehicles manufactured in China.

Across the Atlantic, the US has already implemented stringent trade measures against China. Although the aforementioned foreign automakers have yet to venture into the American market, the Biden administration recently escalated tariffs on goods originating from China, such as solar panels, batteries, medical supplies, and EVs. These tariffs have now been raised from 25% to a significant 100%, further straining tensions between the two global superpowers.

China has responded by threatening to impose tariffs of its own, with hopes that the EU will opt for a different approach from the US. According to sources within the EU's China Chamber of Commerce, insiders have revealed that China is contemplating tariffs as high as 25%. If enacted, these tariffs could have significant implications for US and EU automakers exporting traditional internal combustion engine (ICE) vehicles to China, exacerbating the already strained international relations.

China's threats have been strategically timed, coinciding with a deadline set by the country for the EU to share the results of its probe on imported BEVs and unfair subsidies. The EU has until early June to decide whether it intends to impose tariffs on products imported from China, and thus far, the European Union appears undeterred by China's warnings. Eurasia Group analysts have noted that Brussels is determined to send a strong signal to Beijing through its EV probe, indicating that the EU will counteract Chinese subsidies and overcapacity.

Furthermore, China has indicated that it could also impose additional tariffs on European products, including wine and dairy items, as a demonstration of its commitment to addressing these trade disputes. The Chinese Ministry of Commerce's tariff page reveals that the current tariff on vehicles with engines larger than 2.5 liters imported from Europe is 15%. However, as of 2023, World Trade Organization policies permit China to increase this tariff to 25% on each large-engine vehicle entering the country.

As the largest producer of electric vehicles globally, China is understandably concerned about the ongoing threat of tariffs from its international trade partners. This situation has gained global attention as it may hinder the progress of EV adoption worldwide. The outcome of these trade tensions remains uncertain, and industry experts will be closely monitoring developments to ascertain the potential impact on the global electric vehicle market.