EU and China continue disputes over electric vehicles, threatening a trade war

The EU and China are continuing negotiations on tariffs on electric vehicles, but do not yet see the possibility of a quick deal. Although both sides have noted some progress in recent discussions, there are serious differences.

The EU insists that any agreement must comply with the rules of the World Trade Organization and be legally binding. China has not yet agreed to such demands.

The parties are exploring the possibility of an agreement on price commitments, but have not yet reached a consensus. There are also disagreements about the possibility of concluding separate agreements with automakers. The EU believes that such deals do not violate WTO rules, while Beijing insists on a comprehensive agreement.

China is threatening to impose retaliatory sanctions in the form of tariffs on European goods if the EU does not abandon its demands. In turn, the EU has stated that it will protect its interests.

Recall that last month the EU imposed additional 35% tariffs on Chinese electric vehicles. The tariffs will be valid for five years unless an alternative agreement is concluded.