• China and the EU have agreed to negotiate a series of import taxes to ease the risk of soaring Chinese electric car prices in the EU.
• The EU alleged that Chinese EVs benefited from unfair subsidies by its government.
• China accused the EU of protectionism and breaching trade rules.

Top officials from both China and the EU discussed the tariffs on a call on Saturday and agreed to negotiate a planned series of import taxes, potentially easing the risk of soaring Chinese electric car prices in the EU. However, frictions between the regions persist.

The call represents the first negotiation agreement between the two sides since the EU threatened China with electric vehicle (EV) tariffs of up to 38%. The EU alleged that Chinese EVs benefited from unfair subsidies by its government. In response, China accused the EU of protectionism and breaching trade rules.

An EU spokesperson informed the BBC that Trade Commissioner Valdis Dombrovskis and his Chinese counterpart Wang Wentao had a “candid and constructive” call. They stated that the two sides agreed to “continue to engage at all levels in the coming weeks”. However, the spokesperson reiterated the EU’s opposition to how the Chinese EV industry is funded.

They said “any negotiated outcome” to the proposed tariffs must address the “injurious subsidization” of Chinese EVs.

China issued a similar statement on Saturday, emphasizing its continued disagreement with the EU. In addition to its call with the EU, Mr. Wang met with German Vice-Chancellor and Federal Minister for Economic Affairs and Climate Action Robert Habeck on Saturday.

In a Facebook post regarding the meeting, China’s Ministry of Commerce stated that it had conveyed its “firm opposition” to the tariffs to Mr. Habeck. It reiterated its threat to initiate a lawsuit with the World Trade Organization (WTO) “to firmly defend its legitimate rights and interests.”

Germany also criticized the tariffs when the EU first proposed them last week, following its investigation of Chinese EVs in the trading bloc. Volker Wissing, Germany’s Transport Minister, warned that the move risked triggering a “trade war” with Beijing.

“The European Commission’s punitive tariffs hit German companies and their top products,” he wrote on X, formerly known as Twitter, at the time.

Germany also criticized the tariffs when the EU first proposed them last week, following its investigation of Chinese EVs in the trading bloc. Volker Wissing, Germany’s Transport Minister, warned that the move risked triggering a “trade war” with Beijing.

The EU’s intervention follows the US’s much bolder move of increasing its tariff on Chinese electric cars from 25% to 100% last month. Additionally, they would be imposed on top of the current 10% rate levied on all-electric cars produced in China.

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