China’s electric cars face additional EU tariffs of up to 38% from next month as the vehicles benefit from “unfair” state subsidies, according to a provisional ruling by the European Commission.

The body, which had voiced fears earlier this year that Chinese-made battery electric vehicles were anticompetitive, said in a statement it was aiming for talks with authorities in Beijing in a bid to resolve the dispute before taking any final decision.

It added: “Should discussions with Chinese authorities not lead to an effective solution, these provisional countervailing duties would be introduced from 4 July by a guarantee (in the form to be decided by customs in each Member State). They would be collected only if and when definitive duties are imposed.”

The recommended duties to be imposed included a 17.4% tariff on BYD models with those of SAIC facing a figure of 38%.

The rate against Geely stood at 20%.

The Commission’s decision to threaten tariffs follows a similar move by the United States last month.

Europe’s major car producers had urged no action, fearing reprisals hitting their own sales in China if the world’s second largest economy responded in kind with punishing duties.

As such, their shares were trading down during Wednesday’s trading.

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