The European Union (EU) and China have reached an agreement to engage in talks concerning tariffs imposed on Chinese electric vehicles (EVs). The EU, along with other Western nations, has expressed concern regarding the alleged dumping of Chinese EVs into their markets, which they believe poses a threat to Western companies. These concerns stem from claims that China has artificially reduced the cost of its EVs through the provision of subsidies.
In response to these perceived unfair trade practices, the EU implemented tariffs of up to 38% on Chinese EVs earlier this month, with these tariffs scheduled to take effect on July 4th. However, on Saturday, the EU and China announced their decision to hold consultations regarding these tariffs.
This announcement emerged following virtual discussions between EU Trade Commissioner Valdis Dombrovskis and Chinese Commerce Minister Wang Wentao. Notably, German Vice Chancellor Robert Habeck also visited China on Saturday and met with Wang Wentao.
Following the announcement of the EU-China talks, Habeck remarked that this represents a “first step” towards averting a potential tariff war. “One has to be very careful now, this is a first step and many more will be necessary, but at least this is a first step that was not possible before. That’s why tonight is a good evening if we want to try to maintain a level playing field and avoid a tariff war,” stated Habeck, as reported by Bloomberg.
The EU, alongside other Western nations such as the United States, has voiced concerns about China’s alleged dumping of EVs, renewable energy goods like solar panels, and steel products into their markets. These concerns are rooted in the belief that these products are artificially priced lower due to subsidies, overproduction, and weak domestic demand within China.
Previously, EU chief Ursula von der Leyen asserted that China employs “market distorting” practices in its trade dealings. The EU’s recent tariffs on Chinese EVs followed a probe into EV imports launched by the bloc last year. This sparked a series of reciprocal probes and retaliatory tariffs between the two sides.
China launched an investigation into European brandy imports while the EU initiated a probe into imports of Chinese renewable energy equipment, such as wind turbines and solar panels. Subsequently, China barred European companies from securing contracts within China, prompting the EU to respond with yet another investigation, this time focusing on imports of medical devices from China.
In a related development, last month, the United States announced tariffs of 100% on Chinese EVs. The U.S. also imposed tariffs on Chinese solar energy products, chips, and high-end batteries.
