Back to Topics
Electric Vehicles

China and EU Nearing Resolution on EV Tariff Dispute, State Media Reports, Amidst Trade Diversion Dismissals

1 day ago
5 min read
1 news sources
Share:
China and EU Nearing Resolution on EV Tariff Dispute, State Media Reports, Amidst Trade Diversion Dismissals

Key Insights

  • China and the European Union have reportedly completed the technical aspects of negotiations to resolve their electric vehicle tariff dispute, awaiting the EU's political decision.

  • Chinese state media dismisses concerns of a 'China shock,' asserting that fears of US-tariff-diverted Chinese exports flooding Europe are greatly exaggerated.

  • The ongoing dispute centers on EU tariffs of up to 45.3 percent on Chinese EVs, imposed to counter perceived unfair state subsidies and lower production costs.

  • Progress in talks precedes an anticipated EU-China summit later this month, where trade issues are expected to be a primary focus.

China and the European Union have reportedly concluded the technical phase of negotiations aimed at resolving their contentious electric vehicle (EV) tariff dispute, with the final agreement now contingent on the European side's political will. This significant progress, reported by Chinese state-affiliated media including CCTV’s Yuyuan Tantian on Friday, indicates that a “price undertaking” mechanism, allowing Chinese EV makers to circumvent tariffs by adhering to minimum export prices, is nearing finalization.

The dispute stems from the EU’s imposition of tariffs up to 45.3 percent on Chinese EVs last October. Brussels justified these measures by citing what it perceives as unfair advantages enjoyed by Chinese manufacturers due to substantial state subsidies and lower production costs. The resolution of this issue carries significant weight for the global automotive industry, particularly as the transition to electric mobility accelerates and China emerges as a dominant force in EV production and innovation.

Simultaneously, Chinese state news agency Xinhua, in a commentary on Saturday, vehemently dismissed concerns regarding a new “China shock.” The agency characterized fears that Chinese exports, potentially diverted from the U.S. market due to existing tariffs, are now flooding Europe as “grossly overstated.” This rebuttal underscores Beijing’s stance against protectionist measures and its assertion of fair trade practices amidst escalating global trade tensions.

The reported breakthrough in negotiations precedes a critical EU-China summit scheduled for later this month, where trade issues are expected to dominate the agenda. European Commission President Ursula von der Leyen is anticipated to lead the EU delegation to Beijing, marking 50 years of diplomatic ties between the two economic blocs. Over the past two years, the EU has consistently challenged Beijing on various trade practices, including alleged dumping and market-distorting subsidies, with numerous investigations either underway or in the planning stages.

The outcome of these tariff negotiations will profoundly influence the competitive dynamics of the European EV market, affecting both consumer prices and the investment strategies of major automotive players. A successful resolution could foster a more predictable trade environment, encouraging further investment in EV supply chains and accelerating the deployment of clean transportation technologies across the continent. Conversely, a failure to reach an agreement could exacerbate trade tensions, potentially leading to retaliatory measures and hindering the pace of the global energy transition.