EU‑China electric vehicle trade: Talks progress amid tariffs
After the EU announced introducing tariffs on Chinese cars, reports of intense negotiations between Brussels and Beijing emerged. Both sides are eager to ease trade barriers and strive to reach a compromise, particularly regarding the latest electric vehicle models.
The European Commission decided to impose tariffs on Chinese electric cars in early October. The regulations came into effect at the end of October, sparking a response as the authorities in Beijing advised Chinese car manufacturers to halt major investments in European countries whose governments backed the imposition of additional EU tariffs on electric vehicles made in China, according to Reuters.
However, the escalating trade war between the EU and China might be easing. The EU is still holding talks with China and perceives progress in negotiations with its Chinese counterparts. Negotiators are concentrating on simplifying import procedures for upcoming electric vehicle models that have yet to enter the European market. A crucial aspect of the discussions is the potential for offsetting minimum prices through the trade of hybrid vehicles.
The position of the Chinese side
The government in Beijing presented a proposal involving twelve exporters, including leading manufacturers such as SAIC Motor Corp., BMW Brilliance Motor Corp, and Zhejiang Geely Automobile Co. - the owner of the Volvo brand. The Chinese authorities oppose separate agreements between manufacturers and Brussels, preferring a comprehensive trade agreement with the European Union.
However, the European Commission asserts that individual agreements comply with World Trade Organization rules. Brussels is currently considering signing separate agreements with selected Chinese manufacturers, including two companies within the Geely group. Such an arrangement would suspend tariffs for these particular firms.
Consequences of the new regulations
Currently, car imports from China are subject to an additional 35% tariff on top of the already established 10% charges. In anticipation of changes, Chinese exporters significantly increased vehicle deliveries before the new regulations took effect, allowing them to maintain their current price levels temporarily.
In light of the new tariff regulations, exporters from China are actively seeking solutions to preserve their competitiveness in the European automotive market. Ongoing negotiations between the European Union and China might lead to developing a new automotive sector cooperation model.
