Chinese Business Group Warns of Tariff Increases on Car Imports in Response to U.S., EU Moves

A Chinese business group warned of possible tariff increases on car imports in retaliation for moves taken by the U.S. and European Union on Chinese electric vehicles, as trade tensions escalate between China and the West.

The Brussels-based China Chamber of Commerce to the EU said in a statement Tuesday that it had been informed by insiders that Beijing is mulling temporary extra tariffs on imported cars equipped with large-displacement engines.

"This potential action carries implications for European and U.S. carmakers, particularly in light of recent developments such as Washington's announcement of tariff hikes on Chinese electric vehicles and Brussels' preparations for preliminary measures in a high-profile anti-subsidy investigation into Chinese EVs," the chamber said.

The statement comes as U.S. Treasury Secretary Janet Yellen visits the EU and tries to convince her European counterparts into a united front against a surge in Chinese exports. It also comes shortly after Liu Bin, a policy advisor in China's auto industry, signaled the possible tariff rise in an interview with the Chinese Communist Party-owned tabloid, Global Times.

"In the short term, we suggest raising the temporary tariff rate on imported sedans and sport utility vehicles that have engines larger than 2.5 liters, so as to reduce imports and guide consumption expectations," said Liu, who has participated in drafting China's auto policies.

Based on WTO rules, China's temporary tariff rate on imported vehicles could be raised to a maximum 25 percent, Liu added. The potential move is in line with China's efforts to cut emissions and green its auto industry, Liu said.

China imported 250,000 cars with engines larger than 2.5 liters in 2023, accounting for 32 percent of its total car imports, the Global Times said, citing official data.

A social media account affiliated with China's state broadcaster had warned on Saturday that the country has sufficient countermeasures and will likely hit back if the EU continues to take trade action against Chinese companies.

A day later, Beijing launched an antidumping probe into imports of polyoxymethylene copolymer -- a widely used plastic in auto parts and electronics -- from the U.S., EU, Japan and Taiwan.

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(END) Dow Jones Newswires

05-21-24 2318ET