The EU’s way or the highway.
After months of politically motivated trade tensions between the European Union and China, the former is considering a dramatic retreat of its policies targeting electric vehicle manufacturers in the People’s Republic after just a year and a half.
According to new reports published on January 12 by The New York Times and the South China Morning Post, the European Commission, the executive arm of the European Union, and China’s Ministry of Commerce announced new guidance that would replace steep tariffs on imported EVs from China.
These new policies would allow automakers with factories in China, as well as Chinese automakers, to voluntarily limit the number of units they ship from China to Europe. In addition, the Commission’s new documentation also outlines that Chinese exporters would set minimum prices for said cars; a figure that the EU will calculate based on the ability to «eliminate the injurious effects of the subsidies and provide equivalent effect to duties.» The commission also implored Chinese EV brands to state their plans for future investments in the EU.
Automakers who play ball with the European Commission on its price control and import restriction scheme could be exempt from the anti-subsidy tariffs of up to 35% that it first proposed in 2024 on imported Chinese EVs. In a statement to the Times, European Commission spokesman Olof Gill noted that the European Commission had been flexible with its counterparts in the People’s Republic on this matter, with this measure being an example of such.
“We have said from the start, as the European Commission, as the investigative authority in this case, that we’re willing to look at alternatives to the anti-subsidy duties we put in place,” Gill said.
In a separate statement seen by the SCMP, China’s Ministry of Commerce said the new proposal «fully reflects the spirit of dialogue and the outcomes of consultations between China and the EU,» adding that «It shows that both China and the EU have the ability and willingness to properly resolve differences through dialogue and consultation under the framework of WTO rules and maintain the stability of automotive industrial and supply chains in China, the EU and the whole world.»
Xie Guiming/VCG via Getty Images
Xie Guiming/VCG via Getty Images · Xie Guiming/VCG via Getty Images
Amending the EU’s sliding-scale tariff rules
The rules come as the two economic superpowers have been at odds with each other due to conflicting policies. In October 2024, the European Union published details of an investigation into government subsidies to carmakers in China, which it claimed gave them a competitive advantage over their European rivals in the electric vehicle market.