Electrive — 2025-04-11
Automotive Industry
The EU and China have agreed to return to the drawing board and renegotiate punitive tariffs on China-made EVs. Instead, China could agree to set a minimum price for electric cars made in China.
This is not the first time the solution has been on the table. It first came up in November of last year and now, fuelled by US President Donald Trump’s tariffs, things are again moving in that direction. The German Handelsblatt was the first to report on the upcoming renegotiations. It says that EU trade commissioner Maros Sefcovic spoke with Chinese Commerce Minister Wang Wentao and that both sides agreed to look into setting minimum prices.
Talks will likely continue on 11 April when Spanish Prime Minister Pedro Sánchez visits Beijing. A meeting with China’s President Xi Jinping is already scheduled. Sánchez is considered one of the biggest critics of the EU’s punitive tariffs on China-made electric cars. Even though the meeting has been planned for months, the current rapprochement since Sefcovic’s trip and Trump’s chaotic tariff policies could lead to a breakthrough.
Minimum prices instead of special tariffs
According to the Handelsblatt, the agreement that both sides are reportedly seeking ‘goes far beyond the issue of tariffs’. The EU apparently insists on commitments that Chinese car manufacturers will not only build assembly plants in Europe but ‘create entire industrial centres’ – including orders for European suppliers and technology transfer.
On the other hand, the special tariffs the EU has imposed on EVs imported from China since last year will be replaced by minimum prices. It is supposed to protect European manufacturers from dumping prices for vehicles produced cheaply in China. The advantage for Chinese companies is that they can keep the difference to the minimum price – and do not have to pay it to the EU as customs duty.
Although Europe welcomes the fact that talks have resumed, the minimum prices are also subject to direct criticism. Twelve years ago, the EU replaced customs duties on solar modules with minimum prices. However, the system did not really work – Chinese companies were able to circumvent it quite easily and European customs authorities and politicians were overwhelmed by the task of controlling the minimum prices. There are fears such a scenario could repeat itself.
The special tariffs introduced in 2024 were actually intended to apply for five years. According to Handelsblatt, the fact that talks on their abolition are already being held again in March/April 2025 is seen in Brussels as a concession to Beijing. However, the geopolitical situation has changed since the US election in 2024 – and the world’s second and third-largest economies want to work more closely together. As a sign of easing tensions, China has already halted one tariff plan: the planned punitive tariffs on spirits from the EU have been postponed.