Stellantis CEO has stern warning about Chinese EV tariffs, as China plans retaliation

Chinese officials target Detroit bread-and-butter vehicles in reaction to Biden's tariffs.

May 23, 2024 - 10:30

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Stellantis CEO has stern warning about Chinese EV tariffs, as China plans retaliation

Following President Biden's announcement of a full suite of targeted, stiff tariffs on Chinese imports — namely electric vehicles, the People's Republic is set to retaliate and test the administration with its own tariffs.

As per a new report by Bloomberg, Chinese officials signaled that they are prepared to economically retaliate against the Biden administration's tariffs with their own retaliatory tariffs.

In an announcement that was first posted to social media platform X (formerly known as Twitter), the China Chamber of Commerce to the EU (CCCEU) said that it was notified by 'insiders' that the Chinese government may consider temporarily raising tariffs on "imported cars with large displacement engines" from the current 15% to 25%, a move that can affect automakers in Europe and the United States.

CCCEU’s Note to Press: China may raise temporary tariffs on EU’s large-engine cars ⬇️⬇️ pic.twitter.com/QZkgZM9Zc5— China Chamber of Commerce to the EU (CCCEU) 欧盟中国商会 (@CCCEUofficial) May 21, 2024

The chamber referenced an interview published by CCP-controlled Global Times newspaper on May 21, where Liu Bin, the chief expert at the China Automotive Technology & Research Center, called for temporarily increasing the tariff rate on imported cars with engines larger than 2.5 liters. According to Liu, this retaliatory tariff falls in line with World Trade Organization rules, adding that the country imported 250,000 cars with such engines in 2023 and made up 32% of imports that year.

In the Global Times article, Liu mentioned that the tariffs made by the Biden Administration result in a bad situation for American consumers as well as the administration's long-term emissions goals.

"We also noticed that certain countries and regions have taken some restrictive measures in the EV sector, which run counter to the green development concept and violate market economy principles and WTO rules," Liu told Global Times. "Such measures will only hurt the interests of their own consumers and undermine global efforts to promote the green transition and tackle climate change."

Stellantis CEO: EV tariffs are "a major trap."

Carlos Tavares, chief executive officer of Stellantis NV, arrives for the state dinner marking the visit of China's President Xi Jinping, at the Elysee Palace in Paris, France, on Monday, May 6, 2024.
Bloomberg/Getty Images

While the United States prepares to enact its 100% tariffs on Chinese EVs by Aug. 1, the European Union is expected to go down the same rabbit hole when it unveils its decision on major tariffs on June 5.

In an interview with Reuters, Stellantis (STLA) CEO Carlos Tavares warned that tariffs like that enacted by the Biden administration are "a major trap for the countries that go on that path," noting that such reactionary measures will not allow European and American automakers to find ways to meet the challenge from Chinese automakers on price.

"When you fight against the competition to absorb 30% of cost competitiveness edge in favour of the Chinese, there are social consequences. But the governments, the governments of Europe, they don't want to face that reality right now," Tavares said.

The Stellantis CEO warned that implementing such tariffs will only fuel inflation in parts of the world where they are imposed, as costs absorbed by auto makers to compete in a "Darwinian Chinese-led price war" will trickle down the supply chain to the consumer and affect sales and production in the end.

"We are not talking about a Darwinian period, we are in it," Tavares said.

"This is not going to be easy for the dealers. It's not going to be easy for the suppliers. It's not going to be easy for the OEMs. As we know in Europe, everybody is talking about change as long as change is for somebody else."

More Business of EVs:

The Stellantis CEO is not alone in his criticism of protectionist measures. In a March 2024 interview with the Financial Times, Mercedes-Benz CEO Ola Källenius expressed support for lowering tariffs on Chinese EVs, supporting the idea that the impending levels of increased competition will challenge his European automaker contemporaries to make and sell higher quality cars.

“Don’t raise tariffs,” Källenius told the Financial Times. “I’m a contrarian, I think go the other way around: take the tariffs that we have and reduce them … that is the market economy. Let competition play out.”

Stellantis, which trades under STLA on the New York Stock Exchange, closed at $22.10 today, up 0.045% from open.

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