China and EU to hold talks on electric car tariffs

China and the European Union (EU) are set to hold discussions regarding the imposition of new tariffs on electric vehicles (EVs). These tariffs could potentially lead to a significant increase in the prices of Chinese electric cars within the EU. High-ranking officials from both regions engaged in a phone call on Saturday, during which they agreed to further deliberate on the matter, despite existing tensions. This call represents the first instance where both parties have consented to negotiate. The EU has accused Chinese EVs of receiving unfair subsidies from the Chinese government. In response, China has accused the EU of protectionism and violating trade regulations. An EU spokesperson described the phone call as 'candid and constructive,' stating that both sides would continue to engage at various levels in the coming weeks. However, the spokesperson reiterated the EU's stance against the financial support received by the Chinese EV industry. They emphasized that any negotiated outcome must address the 'injurious subsidization' of Chinese EVs. China issued a similar statement on Saturday, maintaining its disagreement with the EU's position. In addition to the call with the EU, Chinese Trade Minister Wang Wentao met with German Vice-Chancellor and Federal Minister for Economic Affairs and Climate Action, Robert Habeck, on Saturday. China's Ministry of Commerce reported that Wang expressed China's 'firm opposition' to the proposed tariffs and reiterated the threat to file a lawsuit with the World Trade Organisation (WTO) to defend its legitimate rights and interests. Germany has also voiced its criticism of the tariffs. Following the EU's initial proposal last week, Germany's Transport Minister, Volker Wissing, warned that the move could trigger a 'trade war' with China. He argued that the European Commission's punitive tariffs would adversely affect German companies and their leading products. The European car industry has also expressed its discontent. Stellantis, the parent company of brands such as Citroën, Peugeot, and Vauxhall, stated that it does 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 the extent of negotiations with the EU's investigation. These tariffs would be in addition to the existing 10% tax on all electric cars manufactured in China. The EU's intervention follows concerns that Chinese EVs receive excessive government support.

Employees work on the assembly line of new energy vehicles at a factory of Chinese EV startup Leapmotor on April 1, 2024, in Jinhua, Zhejiang Province of China.

The risk of soaring Chinese electric car prices in the EU could be easing after both sides agreed to negotiate a planned series of import taxes. Top officials from both regions spoke about the tariffs on a call on Saturday and agreed to discuss them further, though frictions remain. The call marks the first time the two sides have agreed to negotiate.