Just as EV stocks finally caught a breath amid entering historically the best month for sales and deliveries, a new challenge arose, causing Nio (NYSE: NIO), XPeng (NYSE: XPEV), and Li Auto (NASDAQ: LI) stocks all crashed in the pre-market.
On June 12, the European Commission announced it would impose additional duties of up to 38.1% on imported Chinese electric vehicles starting next month. This move is likely to prompt potential retaliation from China.
China’s commerce ministry stated it would closely monitor the situation and take all necessary measures to protect Chinese companies’ legitimate rights.
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The EU provisional duties will take effect by July 4. The ongoing anti-subsidy investigation is set to conclude by November 2, when definitive duties, typically lasting five years, may be imposed. The Commission indicated that cooperating companies would face rates of 21%, while non-cooperating companies would face rates of 38.1%.
The U.S. has already increased its tariffs by over 100%
This move came just a month after U.S. President Joe Biden announced significant tariff increases on a range of Chinese imports, including electric vehicle batteries, computer chips, and medical products, in a move that could lead to an election-year standoff with Beijing as Biden seeks to appeal to American voters who currently rate his economic policies poorly.
Biden will maintain the tariffs implemented by his Republican predecessor, Donald Trump, while significantly raising others. Notably, he plans to quadruple the tariffs on EVs to over 100% and double the tariffs on semiconductors to 50%.
Chinese EV stocks crash in the pre-market
Upon the news of increased tariffs, the U.S. trading counterparts of Chinese EV stocks showed negative reactions, with decreases from 0.28% to 3.81% after a trading session with strong losses for NIO, XPEV, and LI stocks that add to wider losses since the start of the year.
The upcoming tariffs are set to have a strong impact not just on stock prices but also on delivery and production numbers as the European and American markets become increasingly expensive to access and supply products to.
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