Europe and China Take Step to Resolve Dispute on Electric Vehicles

“The European Commission allowed carmakers to volunteer limits on their imports from China instead of paying tariffs, an arrangement that could help Volkswagen.

 

The European Commission and China’s Ministry of Commerce announced on Monday guidance that could lead to the removal of tariffs on some electric vehicles imported from China, notably Volkswagen's Cupra Tavascan.

 

The European Commission, the executive arm of the European Union, said it was setting up a procedure for automakers to volunteer limits on the number of electric vehicles they ship from China to Europe. The automakers would also set minimum prices for which they would sell these cars.

 

Automakers that do limit the number of imported electric vehicles and pledge price floors could be exempt from the anti-subsidy tariffs of up to 35 percent that the European Commission imposed in late 2024 on electric cars from China.

 

“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,” said Olof Gill, a spokesman for the European Commission.

 

The framework announced on Monday came as Europe was looking to develop more trade ties with regions other than the United States in response to President Trump’s wide-ranging tariffs and other initiatives.

 

But European leaders face a quandary. The United States is the only country in recent years that has been willing to run extremely large trade deficits, which has made the American market enticing for European exporters. China has severely limited purchases from Europe through a wide-ranging program of domestic production to replace imports.

 

Any arrangement for automakers to avoid paying the tariffs on E.V. shipments to Europe may not take effect quickly. Each automaker’s plan would have to be approved separately not only by the European Commission but also by member countries of the European Union — a potentially lengthy process.

 

The new procedure comes after Volkswagen broke ranks this winter with the Chinese car industry by volunteering to limit shipments to Europe of its Cupra electric cars from its factory in Hefei, China, and to set an undisclosed minimum price for the Cupras when they arrived in Europe.

 

In exchange, Volkswagen asked the European Commission to stop collecting its 20.7 percent anti-subsidy tariff on the Cupra. The commission’s move on Monday sets a procedure for reviewing such requests by automakers.

 

“We’ve issued this guidance because, in December, the first meaningful offer on a price undertaking came,” Mr. Gill, the commission’s spokesman, said. “We’ve taken the decision to issue this more detailed additional guidance in the event that other offers will come.”

 

China’s Ministry of Commerce has contended that automakers with factories in China should negotiate as a bloc with the European Commission, and should not submit their own offers. If automakers make separate proposals, they might compete against each other over concessions to Europe.

 

The Chinese ministry took a different stance late last year when seeking its own concessions from foreign producers. The ministry demanded that brandy producers in Europe each submit their own offers to set price limits on their sales to China.

 

European trade officials have been wary of accepting deals that allow automakers to set high minimum prices for their electric cars. That could allow automakers to fix prices and pocket the profits from limited sales in Europe instead of paying tariffs.

 

The European Commission reached a similar deal in 2013 for Chinese solar panel manufacturers to set high minimum prices in the European market in exchange for avoiding tariffs. The Chinese solar industry reaped large profits from these high prices and invested the money in new factories.

 

This helped the Chinese industry become so dominant that most solar manufacturers in Europe have had to close or severely curtail operations.” [1]

 

1. Europe and China Take Step to Resolve Dispute on Electric Vehicles. Bradsher, Keith.  New York Times (Online) New York Times Company. Jan 12, 2026.