China, EU to talk on electric car tariff hike

The risk of rising Chinese electric car prices in the EU might be diminishing after both parties agreed to negotiate a series of planned import taxes. Top officials from both regions discussed the tariffs in a call on Saturday and agreed to continue talks, though tensions remain. This call marks the first negotiation attempt since the EU threatened China with EV tariffs up to 38%.

The EU claimed that Chinese EVs were unfairly subsidized by their government, while China accused the EU of protectionism and violating trade rules. An EU spokesperson told the media that the call between Trade Commissioner Valdis Dombrovskis and his Chinese counterpart Wang Wentao was “candid and constructive.” They mentioned that both sides would “continue to engage at all levels in the coming weeks.” However, the spokesperson reiterated the EU’s opposition to the subsidization of the Chinese EV industry, stating that any negotiated outcome must address this issue.

China released a similar statement on Saturday, maintaining its disagreement with the EU. Additionally, Wang met with German Vice-Chancellor and Federal Minister for Economic Affairs and Climate Action, Robert Habeck, on Saturday. China’s Ministry of Commerce said in a Facebook post that it expressed its “firm opposition” to the tariffs and threatened to file a lawsuit with the World Trade Organization (WTO) to protect its rights.

Germany has also criticized the tariffs. When the EU first proposed them last week after investigating Chinese EVs in the trading bloc, Germany’s Transport Minister, Volker Wissing, warned that the move risked 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.

The European car industry has voiced criticism too. Stellantis, which owns brands like Citroën, Peugeot, Vauxhall, and Fiat, said it did not support measures that contribute to the fragmentation of global trade. The proposed tariffs range from 17.4% to 38.1%, depending on the brand and negotiations with the EU’s investigation, in addition to the current 10% rate on all electric cars produced in China. This intervention by the EU follows the US’s decision to increase its tariff on Chinese electric cars from 25% to 100% last month.

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