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Turkey has decided to impose an additional tariff of at least US $7000 per car imported from China, according to a presidential decision released by Turkey's Ministry of Trade, which will come into effect on July 7.

Turkey's Ministry of Trade explained in an official statement that the 40% tariff will be aimed at traditional, electric and hybrid vehicles from China to protect the decline in domestic production share. the purpose of the tariff is to increase the market share of domestically produced vehicles and reduce the current account deficit.

It is understood that the Turkish economy has been plagued by a current account deficit. According to data released by the Turkish Central Bank on the 10th of this month, Turkey's balance of payments deficit was 5.29 billion US dollars in April, up from 4.43 billion US dollars in March, continuing the trend of continuous expansion of the deficit since the end of last year. If a country's net exports are negative, that is, imports are larger than exports, this will lead to the deterioration of the country's current account and even a deficit. This may be the reason why Turkey imposes tariffs on imported cars from China, increasing revenue while promoting the development of the electric car industry and protecting the domestic auto industry.

It is worth mentioning that this is not the first time Turkey has imposed tariffs on Chinese cars. In March 2023, Turkey imposed an additional tariff of 40 per cent on electric vehicles imported from China, raising the tariff to 50 per cent. In addition, according to a previous decree issued by the Turkish Ministry of Trade, all enterprises importing electric vehicles are required to set up at least 140 authorized service stations in Turkey and set up exclusive call centers for each brand. According to relevant statistics, nearly 80% of Turkey's cars imported from China are internal combustion engines, and the tariff policy has been extended to all areas, including electric cars.

Since the beginning of this year, the sales of Chinese car companies have begun to grow rapidly in the Turkish market. Data show that cumulative car sales in Turkey from January to May in 2024 were 471700, up 6 per cent from a year earlier. Among them, the top three brands were Fiat, Renault and Ford, with sales of 58200, 53700 and 37300 respectively. Volkswagen ranked fourth with 35200, while Chery from China ranked fifth with 27000, up 387.3% year-on-year and accounting for 5% of Turkey's total auto market. In addition, there are 9478 Mingjue and 1065 BYD. It is understood that the share of Chinese brands in the Turkish auto market will be 4.5% in 2023 and may reach 10% this year. Therefore, although the current market share of Chinese brands in Turkey is not high, the imposition of tariffs will have a profound impact on the future development and layout.

Turkey is not the only country that imposes tariffs on Chinese cars. On May 14th, the United States announced that it would increase the tariff rate on electric vehicles imported from China from 25% to 100%, and the European Union is considering similar measures to protect local electric car manufacturers. However, Chinese carmakers may have found a solution, and a number of well-known Chinese automakers are considering building plants in Turkey and localizing electric vehicles in the region, after Turkish Industry and Technology Minister Fatih Kacir said earlier that Turkey was in plant-building talks with Chinese electric carmakers BYD and Chery, as well as SAIC and Great Wall.

Turkey has become an advanced car production center for many brands, but the field of electric vehicles is still in a blank stage. The arrival of Chinese automakers may not only significantly boost their industry by increasing production, but also prepare their local supply chain for Europe's future transition to electric vehicles.

Some people in the industry believe that when Turkey joins the China Automobile Customs Union, it means that the golden era of Chinese car exports is over, because at a time when trade tensions with the United States and the European Union are rising, both the United States and the European Union are accusing China of providing heavily subsidized products to overseas markets to ease manufacturing overproduction caused by insufficient domestic demand. To this end, the Chinese Ministry of Foreign Affairs and the Ministry of Commerce have repeatedly refuted European and American accusations of overcapacity and said that critics are trying to curb China's economic development.

China's automobile is an important pillar of China's economic development, and going out to sea is an important part of China's automobile growth at present, and more and more countries and regions have announced to impose tariffs on cars from China, which means that China's automobile exports are restricted. Building a factory has become a last resort. Judging from the current trend, it does not rule out the possibility that more and more countries will join the China Automobile Customs Union in order to protect their relatively weak local industries.

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