British drivers are being warned that the price of new vehicles could skyrocket in the near future due to a possible trade war between the US, European Union and China.
Both United States have taken significant steps to crack down on the number of Chinese-made electric vehicles being imported by imposing heavy tariffs on manufacturers operating in China.
The first escalation came in May when President Joe Biden announced that the tariff on Chinese electric vehicles under Section 301 of the Trade Act of 1974 would rise from 25 percent to 100 percent.
He said this was necessary to protect the future of the US auto industry in response to “China’s unfair trade practices”.
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Brands with powerful engines have to pay higher rates
LAND ROVER
This was recently followed by the European Union’s decision to increase tariffs, impacting a number of major car brands that could be forced to raise prices in the near future.
It was confirmed that tariffs would impact manufacturers including BYD (17.4 percent), Geely (20 percent), SAIC (38.1 percent), other EV brands that participated in the study (21 percent) and all others brands that failed to help the EU (38.1 percent).
However, China is now considering whether to impose tariffs on manufacturers who produce their vehicles in the European Union, with Chinese brands calling for “the toughest measures”.
The new tariffs would affect brands that produce high-performance engines, potentially affecting Jaguar Land Rover, which produces some models in Slovakia, and Italian brand Ferrari.
According to The Telegraph, Beijing could impose tariffs of 25 percent on imported European petrol cars with engines of 2.5 liters and above.
ManMohan Sodhi, professor of Operations and Supply Chain Management at Bayes Business School (formerly Cass), told GB News that the EU should be cautious when imposing tariffs on China.
He said: “Given the enthusiasm for protecting the emerging electric car industry in the US and EU, China’s response is quite measured, and may only affect European-made luxury cars with large petrol engines.
“Their aim is to get European car manufacturers on board to lobby their governments not to blindly follow the US, given the greater dependence that EU manufacturers have on China and the US presidential elections, where economic rationality is currently is in the backseat.
“The EU and China have greater common ground and the Chinese are encouraging their EU counterparts with this move.”
There are fears that brands will have to increase prices for British, European and Chinese customers to cope with expensive tariffs and continue to make profits.
Tesla has already announced that its vehicles in European markets are likely to result in higher costs for drivers, before urging them to invest in one of its popular electric vehicles before July 1.
With new car registrations declining across Europe, carmakers will have to make tough decisions if they plan to raise prices in the face of higher tariffs.
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Chinese car brands BYD, Geely and SAIC will have to pay strict tariffs throughout EuropeGETTYThis could have a dramatic impact on the rise of electric vehicles in the coming years if they remain unaffordable for the majority of drivers.
Some experts have called for drivers to get extra help through the use of targeted incentives, such as the now axed Plug-in Car Grant, or €4,000 (£3,382) subsidies in France.