Rules of Origin: Tariffs to be avoided, extension expected

EU-made electric vehicles look set to avoid a 10% tariff after the EU tabled a deal that should see current trade terms extended by three years. The initial terms of the Trade Cooperation Agreement relating to EV sales were due to expire on 31 December this year.

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Reports last Wednesday confirmed that the EU has put a proposal to member states, to be voted on this week. If passed – as is expected – the deal will avoid tariffs being imposed on EU-made electric vehicles that import a large amount of parts or materials from outside the EU. Such vehicles were initially exempt from the 10% tariff, as determined by the EU’s ‘rules of origin’ requirements.

The temporary measure was to allow time for battery manufacturing capacity to improve across Britain and the EU. With capacity still some way behind that of other markets – such as China – the extension (to 31 December 2026) will grant more time for investment to be made while keeping EU-made vehicles competitive.

The current terms being extended should avoid vehicle manufacturers applying related price increases. The BVRLA recently created a Rules of Origin Guidance page, which provides further background on this topic.