Electric Vehicle 'Tariff Bomb' Imposed... But EU-China "Negotiations Underway Behind the Scenes"

Bloomberg "EU Sends Negotiation Team to China"

The European Union (EU) decided the previous day to impose a 'tariff bomb' of up to 45.3% on Chinese electric vehicles, and both sides are now engaging in behind-the-scenes negotiations to find alternatives.

On the 30th (local time), Bloomberg News reported, citing anonymous sources, that the EU has decided to send officials to Beijing to seek alternatives regarding tariffs on Chinese electric vehicles.

Sources indicated that the EU's acceptance of China's request to send a negotiation team suggests momentum in the talks.

From midnight on the same day, the EU raised tariffs on Chinese electric vehicles from the existing 10% to between 17.8% and 45.3%. China strongly protested and announced it had filed a complaint against the EU with the World Trade Organization (WTO).

Both sides are exploring measures such as price commitments that control prices and export volumes instead of tariffs. However, it is known that the differences in positions between the EU and China remain significant. So far, the EU and China have held eight rounds of talks, but the negotiation proposals presented by China have not met the EU's strict requirements, including compliance with WTO regulations. Additionally, the EU wants to monitor measures regarding compliance and enforceability even if an agreement is reached.

Some sources said that despite differences in views, recent negotiations have made some progress, and both sides are examining whether they can simplify the negotiation conditions. In particular, conditions related to new models that have not yet been exported and ways to offset the impact on the minimum import price system for electric vehicles through other products such as hybrid cars are reportedly subjects of negotiation.

However, the Chinese authorities' warning to domestic companies not to pursue individual negotiations with the EU poses an obstacle to reaching an agreement. China wants the government to lead the negotiations and for all companies to conclude a comprehensive agreement accordingly. The authorities have prepared price proposals on behalf of 12 companies, including China SAIC Motor, BMW Brilliance, and Zhejiang Geely Automobile. On the other hand, the EU holds the position that individual agreements are possible under WTO rules.

Although tariffs began to be imposed from this day, Bloomberg reported that a settlement of negotiations is possible if both sides reach an agreement.