NIO (NYSE: NIO) stock fell during pre-market trading Wednesday following reports suggesting that the EU will announce tariff plans targeting Chinese electric vehicles later this week.
According to CNBC reports, the European Union is poised to unveil its tariff rate plan for Chinese electric vehicles (EVs) this week. This move is part of the EU’s efforts to protect its domestic industry from low-priced, subsidized imports.
Potential Tariff Rate Increases
Currently, the EU applies a standard 10% duty on imported EVs. However, starting July 4, the bloc is set to increase these fees for Chinese EVs provisionally.
Citi analysts suggested that the tariff rate could surge to approximately 25-30% from the current 10%, with a risk scenario envisioning a 30-50% hike. Meanwhile, Anthony Sassine, senior investment strategist at KraneShares, expects the tariff rates to range between 10% and 20%, potentially reaching the higher end of the spectrum following the recent European Parliament elections.
Ursula von der Leyen, president of the European Commission, has been a vocal advocate for reducing economic dependence on Beijing. Her party, the European People’s Party, gained seats in the recent elections, potentially strengthening her position to push through these tariff measures.
In October, the European Commission initiated an investigation to examine subsidies granted to EV manufacturers in China. The EU contends that such subsidized imports pose an economic threat to the region’s EV industry.
Impact on the Chinese EV Industry
Speaking on CNBC’s “Squawk Box Asia” on Tuesday, Sassine expressed skepticism about the potential impact of tariffs on Chinese electric vehicles. Despite the tariffs, Sassine believes that Chinese manufacturers’ efficiency and technological advancement may enable them to remain competitive in pricing compared to their EU counterparts.
China’s EV sector has experienced significant growth, propelled by incentives and government support. However, this rapid expansion has raised concerns about overcapacity among U.S. and European authorities.
In March, U.S. Energy Secretary Jennifer Granholm cautioned about the possibility of China flooding the U.S. electric vehicle market with its offerings. President Joe Biden echoed similar concerns, leading to the announcement of stiff new tariffs in May. The Biden administration raised tariffs on Chinese EV imports to 100%, a substantial increase from the previous 25%.
Additionally, Turkey recently declared its decision to impose an additional 40% tariff on imports of vehicles from China, underscoring the global scrutiny and trade tensions surrounding the automotive sector.
NIO (NYSE: NIO) Stock Price Action
As of 07:00 a.m. (Eastern Time) Wednesday, shares of NIO (NYSE: NIO) traded at $4.31, marking a 3.36% decrease compared to the previous trading session.
