China is urging the EU to remove its provisional tariffs on Chinese electric vehicles by July 4. These tariffs, ranging up to 38.1%, are scheduled to go into effect while the EU investigates what it considers to be unfair subsidies. China has been persistent in its calls for the EU to cancel these tariffs and has expressed its willingness to engage in negotiations to avoid another tariff war, especially following the impact of U.S. tariffs imposed during the Trump administration. Both sides have agreed to restart talks, with EU Commissioner Valdis Dombrovskis and China’s Commerce Minister Wang Wentao engaging in a candid and constructive call.
The EU has emphasized the need for any negotiated outcome to effectively address injurious subsidization. The tariffs are set to be finalized on November 2 at the conclusion of the EU’s anti-subsidy investigation. The EU’s trade policy has become increasingly protectionist due to concerns of China flooding the EU market with cheap goods, a potential consequence of China’s production-focused development model. Amid these tensions, China has denied accusations of unfair subsidies and overcapacity, attributing its EV industry development to technological advantages and strong market and industry supply chains.
Trade relations further deteriorated due to disagreements over human rights issues and diplomatic tensions. Although Beijing has expressed readiness for talks, it has also hinted at retaliatory measures if the EU does not reconsider its stance. This includes the possibility of anti-dumping investigations into European pork imports, an anti-subsidy investigation into European dairy goods, and tariffs on certain European-made cars. Similarly, the EU has ongoing investigations that may lead to measures targeting distortions in Chinese products.