EU plans to impose 9% tariff on Tesla imports from China amid trade tensions and subsidy disputes

The European Union said Tuesday it plans to introduce an additional 9% tariff on Teslas imported from China, while notifying automakers of its preliminary decision to move forward with final tariffs on electric vehicles shipped from the country.

The bloc unveiled its latest measure to try to counter subsidies Beijing has provided to industry, with officials saying they will continue to consult with manufacturers ahead of a vote by member states on tariffs due to take effect in November.

The proposed tariffs have been revised, with MG maker SAIC Motor Corp., Volvo Car AB parent Geely and BYD Co. each facing additional tariffs of 36.3%, 19.3% and 17%, respectively, all slightly lower than previously announced.

Other companies that cooperated with the EU investigation but were not sampled by investigators would be hit by a 21.3% tariff, while non-cooperating manufacturers would face a 36.3% tariff. The fees would be on top of the 10% tariffs already imposed on exporters from China.

For Tesla Inc., the 9% tariff is relatively welcome news, as it is lower than what other manufacturers face. EU officials said one factor behind the calculation is that Beijing appears to provide fewer subsidies to foreign-owned companies.

According to EU officials, most of the benefits Tesla received were due to supplying batteries at a price below market prices. The Austin-based company also received benefits such as land use rights, reduced income tax and subsidies in various forms, including a national subsidy that all exporting producers received, the officials added.

Tesla shares rose 0.8% at 7 a.m. in New York, before the start of regular trading. The stock has fallen 10% this year.

Parties now have until August 30 to submit comments and request hearings on the proposal. If a qualified majority of member states do not block the measures in a binding vote, the European Commission will publish a final regulation on the tariffs by October 30. The tariffs would remain in place for five years and could be extended after a review.

Brussels and Beijing have been holding talks over the past few months to explore whether an alternative solution can be found. The EU has said any such solution must comply with World Trade Organisation rules and address the underlying issue of subsidies.

China says the measures are protectionist and has threatened to retaliate with tariffs of its own on a range of sectors including pork, alcoholic beverages and cars with large engines. Beijing is also challenging the measures at the WTO.

The China Chamber of Commerce to the EU expressed “strong dissatisfaction and firm opposition” to the disclosure in a statement published on X, adding that there was insufficient evidence that Chinese EVs would cause substantial material harm to the bloc’s market.

Spokespeople for Geely and BYD declined to comment, while representatives for SAIC did not immediately respond to requests for comment sent outside regular business hours.

Several member states, including Germany and Hungary, have expressed resistance to the tariffs, but a blocking majority would be needed to stop them.

The EU also said on Tuesday that it plans to grant a lower rate to joint ventures that were not exporting at the time of the investigation period. Those companies would face the same rate as the cooperating party in the joint venture.

The EU had required affected companies to provide collateral for the provisional tariffs, but officials said the bloc would not levy them retroactively. The tariff rates could still change before they become final, officials said.