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EU and US to Impose 38% Tariff on Chinese Electric Vehicles Exports

Worldwide demand for eco-friendly vehicles is witnessing double-digit growth over the year. This could be observed from traditionally fuelled power to electric run engines. And, opens the door for a billion dollar market for EVs and the business directly or indirectly associated with it.

In Western countries, Chinese exporters of zero-emission vehicles have successfully replaced local industries by offering competitive prices. This raises concerns about unfair trade practices for domestic players.

The US and EU imposed tariffs on China’s electric vehicles to secure their domestic market. At a G7 meeting, the EU farmed the law to impose a sharp 38% tariff on Chinese exporters associated with EVs. Let’s explore this –

Electric Vehicle: The Rising Sun for Market Dominance

To safe secure their industry from Chines exporters, EU and US are tightening their imports rules to take the advantage of this massive market. As per market trend, the production of eco-friendly vehicles will increase by double digit growth. This new segment is going to be the future of all vehicles with immense export and import potential. Let’s how –

Analysing the export data from 2023 Q1 to 2024 Q1. The Germany and China emerged as the leading players with USD 8.8 billion, and USD 8 billion respectively. This dominant position establish them as leading players.

Top EV exporters Globally
Countries2023 Q12023 Q22023 Q32023 Q 42024 Q1
South Korea3.
Value USD Billion

like the exports, electric vehicle imports declined in Q1 of 2024. Like, the UK and the USA imports of EVs decreased by 19.7% and 10.3% in Q1 of 2024 compared to Q4 of 2023. On the other hand, Germany enjoyed a trade surplus of $6.7 billion. For a comprehensive analysis of trade, look at the table –

Top EVs Importers Globally
Countries2023 Q12023 Q22023 Q32023 Q 42024 Q1
Value USD Billion

How do Electrical Vehicles Runs Smoothly?

All electric vehicles consist of capacitors. This act as shock absorbers for electricity, control the voltage fluctuation, and protect electric vehicles from short circuits. Explore what is the market size of the competitors –

Japan, China, and Germany are the emerging leading exporters of capacitors. They export value for capacitors stood at $1487, $1294, $504, and $495 billion in Q1 of 2024. Remarkably, Japan is the only country among the top exporters whose value has declined by 8.8% in the same year.

Countries2023 Q12023 Q22023 Q32023 Q 42024 Q1
South Korea437448439398415
Value USD Billion

What are the top components for Electric Vehicles?

The electric vehicles that are presented in the market are made of thousands of spare parts. And, here are some of the top materials required to build it.  Exporters and importers associated with these parts can enter this opportunity to expand the base. Let’s see what are the top products –

Interestingly, lithium-ion-accumulators export and import increased by 24.5% and 23.6% in 2023 from the previous years. Further, the electrical transformer export increased by $10.6 billion in the same year.  Electrical resistors and capacitors declined in their trade in 2023, compared with 2022.

Top Exported Components for EVs
Electrical Transformer144.0155.4145.1155.7
Electrical Capacitors40.336.537.234.3
Machinery and plant equipment 49.353.247.151.4
Electrical Resistors15.412.716.011.9
Value USD Billion

Lithium-Ion Battery: The Heart of Electric Vehicles

Lithium-ion batteries are the core part of electric vehicles, which consist of 40-50% of the total cost of EVs. Any trade disruption may hamper the global supply, and rise in the price. Let’s discover the top exporters, and connecting with them businesses can ensure sustainable supply and lasting growth. Here’s a quick view –

Over the years, China has established itself as the undisputed king in Lithium-Ion-Battery exports. In Q1 of 2024 China exported $13.1 billion of batteries. Hungry, Poland, and Germany’s export value stood at $1.9, $1.6, $1.4, and $1.2 billion, respectively in Q1 of 2024.

Export of Lithium-Ion Battery
Countries2023 Q12023 Q22023 Q32023 Q 42024 Q1
South Korea1.91.81.6 31.81.2
Value USD Billion

Impact of Sanctions on the EVs Market?

Sanctions imposed by the US and EU on China could have a wide range of impacts on the global economy. With around 38% tariff, Chinese businesses will find it difficult to enter foreign markets. Further, it’ll drastically affect businesses with a lack of availability. In this scenario, the US and the UK’s economy would be the most affected as they are the top importers.

In the case of China’s retaliation, the world economy will get a severe dent which will take time to recover. China enjoys the complete majority in lithium-ion battery production and covers 70-80% market share globally, any disruption may create havoc in the market with no supply.

For a sustainable supply chain and lasting growth, world leaders must discuss sanctions and their alternatives on a common platform. Also, work on a platform to check the free and fair-trade competition globally.

G-7 Sanctions On China- An Unforeseen Opportunity for Export and Import Business