EU And China Agree to Negotiations on EV Tariffs, Minister Says

China and the European Union have agreed to discuss tariffs imposed on electric vehicles (EVs) made in China that are exported to the European market, following a visit by Germany’s economy minister.

That decision, on Saturday, prompted a call by China’s state media for the EU to scrap its proposed tariffs before they are set to start on July 4.

German Economy Minister and Vice Chancellor Robert Habeck made a high-profile trip to Beijing and Shanghai on the weekend – the first visit by a senior European official since Brussels proposed hefty additional duties on EV imports because of the huge subsidies extended to Chinese carmakers.

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Habeck said he had been informed by EU commissioner Valdis Dombrovskis that there would be negotiations, after the latter agreed with China’s Commerce minister Wang Wentao to discuss the EU’s anti-subsidy probe.

Habeck called it a first step and said many more would be necessary.

In Beijing, he stressed that the EU tariffs were “not punitive” – like levies imposed by the US, Turkey or Brazil – as they sought “an equalization of advantages granted,” which was why the issue had to be discussed.

Zheng Shanjie, chairman of China’s National Development and Reform Commission, denied accusations of unfair subsidies, saying the development of the country’s new energy industry was the result of fierce competition.

Zheng told Habeck the EU approach was not in line with moves to cut greenhouse gas emissions and would hurt its car sector. He hoped that Germany would demonstrate leadership within the EU, because the proposed EU duties on Chinese-made EVs would hurt both sides.

The EU’s provisional duties of up to 38.1% on imported Chinese EVs are set to apply by July 4, with the investigation set to continue until November 2, when definitive duties, typically for five years, could be imposed.

Talks in Shanghai, with Chinese Commerce Minister Wang Wentao and Industry Minister Jin Zhuanglong were “very open” and carried out in an “intense atmosphere,” which allowed a blunt exchange of arguments that was genuine, Habeck said.

‘China’s support for Russia affected EU stance’

On Saturday, Habeck also warned Chinese officials that its support for Russia would have economic consequences, because the two issues could not be separated.

Dual-use technical items that could be used in civilian and military settings, that could used to harm Western interests, were reaching Russia via China.

“Our relationship, our direct relationship, has already been negatively affected,” he was quoted as saying by DPA.

“We would proceed differently and certainly not quite as hard when analysing where we have dependencies on raw materials and technical goods if this war [in Ukraine] or China’s support for Russia in this war did not exist,” he said.

After those remarks, the Chinese Commerce Ministry said the two sides had agreed to cooperate to avoid the planned tariffs.

Later, Habeck said European states would need to join forces to withstand competition from China and South Korea, as major nations had a precise plan on where they would be in the decades ahead – preparing financial resources and strong policies to implement them.

His trip had shown that the EU needed to confront competition “in the toughest sense”, because “Europe does not have this plan to an adequate extent.”

“I believe we have to confront this competition,” Habeck said, but added that cooperation was also needed, and for people not to see others as opponents or enemies, but getting an understanding for each other.