Negotiations over electric car tariffs between the EU and China continue 

After the recent trade disputes between the EU and China over tariffs, both sides are looking for solutions. Recent attempts between the European Commission and the Chinese government to resolve the ongoing dispute over battery electric vehicles (BEVs), in particular, failed to produce a breakthrough, as deep-rooted differences remain. 

However, despite these differences, both sides remain hopeful and have committed to intensifying negotiations. Brussels plans to offer Chinese automakers another opportunity to set minimum prices for their vehicles.

“Both sides agreed to step up efforts to find an effective, enforceable, and WTO-compliant solution to the BEV case (…) without affecting the EU investigation and its timelines,” said Valdis Dombrovskis, the Commission’s Executive Vice President for trade, after a “constructive” meeting with China’s Minister of Commerce, Wang Wentao.

The European Commission has accused China of heavily subsidising its BEVs to lower retail prices and outcompete European automakers. Following a lengthy investigation, the Commission discovered widespread use of public funds across China’s supply chain, threatening unsustainable economic losses for the EU automotive industry.

In response, the Commission proposed new import tariffs on Chinese-made BEVs, including those produced by Western companies operating in China. These tariffs, ranging from 7.8% to 35.3%, depending on the brand’s cooperation with the investigation, would add to the existing 10% import rate.

The increased tariffs aim to create fairer competition and reduce the price disparity between European and Chinese manufacturers. EU member states must approve these tariffs in a vote expected before November. If ratified, the rates would remain in place for five years.

China has publicly called the proposal a “blatant protectionist act” and is accusing the EU of exaggerating the subsidy issue. In retaliation, Beijing has initiated investigations into key European exports like pork, brandy, and dairy products.

Despite the public tension, Chinese officials have worked behind the scenes to negotiate a resolution and protect domestic companies from the proposed tariffs. This diplomatic push culminated in the meeting in Brussels between Minister Wang and Vice President Dombrovskis.

During the talks, Dombrovskis defended the Commission’s measures, stressing they were “strictly based on facts and evidence” and designed only to “offset” the effects of Chinese subsidies. He also condemned Beijing’s retaliatory investigations as “unjustified” and urged China to end them.