China and the EU are near to finalizing an agreement on electric vehicle tariffs, as per state media reports, denying concerns over 'trade diversion'.
The electric vehicle (EV) tariff dispute between China and the European Union (EU) is now at a critical juncture, with technical negotiations largely finalized and the resolution hinging primarily on political will from the EU side. Chinese state media reported that only the final step remains, emphasizing the EU's demonstration of political commitment is crucial to push the resolution forward[1][2].
The dispute began when the EU imposed tariffs of up to 45.3% on Chinese EVs in October 2024, aiming to counteract what it considers unfair advantages Chinese manufacturers gain from state subsidies, preferential financing, and low production costs[1][3]. In response, China retaliated by launching anti-dumping probes and tariffs on European products such as French cognac, creating a complex trade standoff where resolution in one area (EV tariffs) influences the other (cognac imports)[3].
Progress was made in April 2025 when China and the EU agreed to negotiate a "price undertaking" mechanism that would allow Chinese EV makers to avoid tariffs by adhering to minimum export prices[1]. This negotiation is linked to broader trade tensions, but the upcoming EU-China summit in Beijing later this month (July 2025) is expected to be a critical moment for finalizing the deal, coinciding with the 50th anniversary of diplomatic ties between the two sides[1][2].
The primary hurdle now is whether the European Commission and member states are willing to finalize the agreement. The resolution depends on the establishment of minimum export prices to prevent undercutting and avoid tariffs, as well as the EU's ability to navigate the complexities of cross-issue leverage[1][2][3][4].
The tariffs have already reduced Chinese EV imports by 7% YoY and reshaped supply chains, putting pressure on industry stakeholders to seek stability. The upcoming summit offers a diplomatic platform to cement the deal amid high-level engagement.
In summary, the current status of the EV tariff dispute between China and the EU is that technical negotiations have been largely finalized, with the resolution now depending primarily on political will from the EU side to complete the deal. The upcoming EU-China summit in Beijing later this month is expected to be a critical moment for finalizing the deal, offering a diplomatic platform to cement the agreement amid high-level engagement.
### Key Points on the Dispute and Resolution Efforts:
- The EU imposed tariffs of up to 45.3% on Chinese EVs in October 2024 to counteract what it considers unfair advantages gained by Chinese manufacturers. - China and the EU agreed in April 2025 to negotiate a "price undertaking" mechanism that would allow Chinese EV makers to avoid tariffs by adhering to minimum export prices. - The upcoming EU-China summit in Beijing later this month is expected to be a critical moment for finalizing the deal, coinciding with the 50th anniversary of diplomatic ties between the two sides.
### Key Factors Influencing Resolution:
| Factor | Description | |------------------------------------------|----------------------------------------------------------------------------------------------------------| | **Political Will of the EU** | The primary hurdle now is whether the European Commission and member states are willing to finalize the agreement. | | **Price Undertaking Mechanism** | Establishing minimum export prices to prevent undercutting and avoid tariffs is central to the deal. | | **Broader Trade Relations** | Linked disputes such as China's tariffs on French cognac complicate negotiations, with cross-issue leverage. | | **Upcoming EU-China Summit** | The summit offers a diplomatic platform to cement the deal amid high-level engagement. | | **Market Impact and Industry Pressure** | The tariffs have already reduced Chinese EV imports by 7% YoY and reshaped supply chains; industry stakeholders seek stability. |
- The diplomatic negotiations between China and the European Union (EU) regarding the 'price undertaking' mechanism for Chinese electric vehicle (EV) manufacturers are now crucially dependent on the EU's political will to finalize the agreement.
- Achieving renewable-energy industry growth is intrinsically linked to the successful resolution of the ongoing EV tariff dispute, as the 'price undertaking' mechanism could provide a pathway for Chinese EV makers to export their products without incurring tariffs.
- The upcoming EU-China summit, scheduled for later this month, presents a significant opportunity for both regions to finance the future of clean energy by finalizing the 'price undertaking' agreement, thereby bolstering diplomatic and economic ties while reinforcing their commitments to reducing carbon emissions in the global finance sector.
