Europe may need to impose tariffs of up to 55% to curb Chinese EV imports: report
Vehicles set to be shipped to Europe, at Taicang Port on Dec. 19, 2022, in Suzhou, China.
Vcg | Visual China Group | Getty Images
The European Union will need to levy higher-than-expected tariffs of up to 55% on Chinese electric vehicles to curb their imports into the bloc, according to a new analysis by Rhodium Group.
The findings, released Monday, come amid the EU’s ongoing anti-subsidy investigation into EV imports from China.
Rhodium Group, which expects the EU to impose tariffs in the 15% to 30% range on Chinese EVs, said those tariffs were unlikely to be enough to check competition from China.
“Even if the duties come in at the higher end of this range, some China-based producers will still be able to generate comfortable profit margins on the cars they export to Europe because of the substantial cost advantages they enjoy,” the report said.
Chinese companies such as BYD, which toppled Tesla to become the world’s largest EV manufacturer last year, can sell cars at much higher rates and profit margins in regions such as the EU compared with the domestic market, despite paying a 10% tariff rate. Chinese EV makers are locked in an intense price war in their home market.
BYD’s Seal U model, which sells for 20,500 euros in China and 42,000 euros in the EU, generates an estimated profit of 1,300 euros in its home market versus 14,300 euros per car in Europe, Rhodium said. Even after 30% in tariffs, a company like BYD will make a higher profit in the EU, it added.
The report said that BYD will likely need to cut prices to meet its goals of gaining more market share in the EU. A 30% tariff rate would still leave enough room to do so.
“Much steeper duties of around 45%, or even 55% for fiercely competitive producers like BYD, would probably be necessary in order to render exports to the European market unappealing on commercial grounds,” the report said.
The EU investigation
The European Commission, the executive arm of the EU, launched a probe into Chinese EVs and subsidies last year, with officials saying that a flood of cheap vehicles threatened domestic producers.
According to some experts, incentives put in place in China in the early 2010s led to a surge in startups and increased battery cell capacity in the country, paving the way for globally competitive and affordable EVs.
Chinese EV makers have already been facing resistance from the U.S. amid high tariffs and political opposition, making the European market more important to companies such as BYD that are pursuing global expansion.
EVs from Chinese companies are expected to make up 11% of the EU’s market in 2024 and could reach 20% by 2027, according to an analysis by the European Federation for Transport and Environment.
When accounting for made-in-China vehicles from non-Chinese-companies, the figure is expected to surpass 25% this year.
Imports of EVs from non-Chinese firms could also come under in the EU subsidy investigation, with Rhodium estimating that duties at the 15%-30% level could wipe out the business for foreign players such BMW or Tesla that ship cars from China.
In response to the policy risks, EV makers have been working on shifting manufacturing to Europe. BYD plans to build a factory in Hungary.
However, Rhodium adds that Brussels could use other means to protect the Europe’s EV industry, such as restricting Chinese imports on national security grounds or increasing consumer subsidies for EU-made vehicles.
The Chinese government has slammed the EU subsidy investigation as “blatant protectionism,” arguing that its companies are simply more competitive than their Western counterparts.
Piotr Swat | Lightrocket | Getty Images
AppLovin CEO Adam Foroughi provided more clarity on the ad-tech company’s late-stage effort to acquire TikTok, calling his offer a “much stronger bid than others” on CNBC’s The Exchange Friday afternoon.
Foroughi said the company is proposing a merger between AppLovin and the entire global business of TikTok, characterizing the deal as a “partnership” where the Chinese could participate in the upside while AppLovin would run the app.
“If you pair our algorithm with the TikTok audience, the expansion on that platform for dollars spent will be through the roof,” Foroughi said.
The news comes as President Trump announced he would extend the deadline a second time for TikTok’s Chinese-owned parent company ByteDance to sell the U.S. subsidiary of TikTok to an American buyer or face an effective ban on U.S. app stores. The new deadline is now in June, which, as Foroughi described, “buys more time to put the pieces together” on AppLovin’s bid.
“The president’s a great dealmaker — we’re proposing, essentially an enhancement to the deal that they’ve been working on, but a bigger version of all the deals contemplated,” he added.
AppLovin faces a crowded field of other interested U.S. backers, including Amazon, Oracle, billionaire Frank McCourt and his Project Liberty consortium, and numerous private equity firms. Some proposals reportedly structure the deal to give a U.S. buyer 50% ownership of the company, rather than a complete acquisition. The Chinese government will still need to approve the deal, and AppLovin’s interest in purchasing TikTok in “all markets outside of China” is “preliminary,” according to an April 3 SEC filing.
Correction: A prior version of this story incorrectly characterized China’s ongoing role in TikTok should AppLovin acquire the app.
U.S. President Donald Trump speaks during an event announcing new tariffs in the Rose Garden at the White House in Washington, April 2, 2025.
Chip Somodevilla | Getty Images
President Donald Trump announced an aggressive, far-reaching “reciprocal tariff” policy this week, leaving many economists and U.S. trade partners to question how the White House calculated its rates.
Trump’s plan established a 10% baseline tariff on almost every country, though many nations such as China, Vietnam and Taiwan are subject to much steeper rates. At a ceremony in the Rose Garden on Wednesday, Trump held up a poster board that outlined the tariffs that it claims are “charged” to the U.S., as well as the “discounted” reciprocal tariffs that America would implement in response.
Those reciprocal tariffs are mostly about half of what the Trump administration said each country has charged the U.S. The poster suggests China charges a tariff of 67%, for instance, and that the U.S. will implement a 34% reciprocal tariff in response.
However, a report from the Cato Institute suggests the trade-weighted average tariff rates in most countries are much different than the figures touted by the Trump administration. The report is based on trade-weighted average duty rates from the World Trade Organization in 2023, the most recent year available.
The Cato Institute says the 2023 trade-weighted average tariff rate from China was 3%. Similarly, the administration says the EU charges the U.S. a tariff of 39%, while the 2023 trade-weighted average tariff rate was 2.7%, according to the report.
In India, the Trump administration claims that a 52% tariff is charged against the U.S., but Cato found that the 2023 trade-weighted average tariff rate was 12%.
Many users on social media this week were quick to notice that the U.S. appeared to have divided the trade deficit by imports from a given country to arrive at tariff rates for individual countries. It’s an unusual approach, as it suggests that the U.S. factored in the trade deficit in goods but ignored trade in services.
The Office of the U.S. Trade Representative briefly explained its approach in a release, and stated that computing the combined effects of tariff, regulatory, tax and other policies in various countries “can be proxied by computing the tariff level consistent with driving bilateral trade deficits to zero.”
“If trade deficits are persistent because of tariff and non-tariff policies and fundamentals, then the tariff rate consistent with offsetting these policies and fundamentals is reciprocal and fair,” the USTR said in the release.
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