The European Commission is expected to reveal this week its proposed tariffs on Chinese electric vehicles (EVs) due to excessive subsidies. Beijing is expected to respond sharply to this announcement and may even retaliate.

Washington increased tariffs on Chinese electric vehicles to 100%. Brussels will likely impose lower tariffs on imports from Chinese automakers like BYD and Geely, as well as American manufacturers like Tesla that ship their vehicles from China to Europe.

The decision was made at a time when European automakers are under competition from Chinese rivals offering more affordable EVs. Nevertheless, the auto sector on the continent hardly supports tariffs. European automakers import cars from China, especially German manufacturers, who heavily rely on sales in China and are worried about possible retaliation from Beijing. Ursula von der Leyen, the president of the European Commission, has repeatedly stated that Europe needs to act to prevent China from overwhelming the bloc's market with subsidized electric vehicles.

China criticized the EU for the anti-subsidy investigation and asked for collaboration. They also lobbied specific EU nations, but it's unclear how they would react to tariffs. Beijing has already started an anti-dumping probe into imports of brandy, which are primarily made in France. In April, a bill was passed to enhance its ability to respond if the EU or the US impose tariffs on exports from the second-largest global economy. A few weeks prior to the deadline for enforcing interim measures on July 4, the EU issued a pre-disclosure notice. However, they could be applied backwards for the previous ninety days.

Three working days will be provided to interested parties to provide feedback regarding the correctness of the Commission's calculations. The investigation will continue until the end of October. After that, a decision about imposing final duties, which typically last for five years, will be made. The proposed tariffs would take effect unless they were strongly opposed by EU states. That gives Brussels and Beijing enough time to maybe reach an agreement. Executives from China are hoping these discussions will lessen the damage. Analysts predict tariffs in the range of 10% to 25%.