Trump’s move, which suspended tariffs for two months on everything except cars—including European ones—has significantly alarmed European countries. And it seems to have made Brussels realize the downside of something they too had imposed, albeit in a more targeted and less impactful way.
According to Reuters, the European Union and China have agreed to open negotiations to explore the introduction of minimum prices on Chinese electric vehicles as an alternative to the tariffs Europe imposed starting in 2024. A spokesperson for the European Commission confirmed on Thursday that the talks are set to begin immediately.
The Germans celebrate the new EU-China “partnership”
The news, first reported by the German financial newspaper Handelsblatt, marks a significant step forward in the attempt to ease trade tensions between the two powers in a global context increasingly fragmented by the return of protectionist policies.
European Commissioner for Trade Maros Sefcovic discussed the initiative with Chinese Commerce Minister Wang Wentao within the past 24 hours. Both parties expressed openness to the idea of replacing tariffs with a “price undertaking” mechanism—in other words, a commitment by Chinese manufacturers to respect a minimum price for vehicles exported to the EU.
Such agreements are not new in trade policy, but until now, they have been applied almost exclusively to raw materials or standardized products. Extending this approach to complex goods like automobiles is therefore an unprecedented test—both in terms of its effectiveness and the enforceability of such commitments.
In the meantime, the tariffs imposed by the EU in October 2024—reaching up to 45.3% for Chinese vehicles—remain in place. These particularly affect major brands like BYD (17.0%), Geely (18.8%), and SAIC (35.3%), in addition to the standard 10% tariff.
The European Commission emphasized that any minimum price agreement would need to be just as effective and enforceable as the current tariffs in countering the alleged market distortions caused by Chinese state subsidies.
It’s the Germans who are celebrating the most, as Germany’s automotive industry is the most exposed to tensions between the EU and China. From the beginning, Germany voted against the introduction of new tariffs. Even after the diplomatic meeting between the two powers, the VDA—the German equivalent of Denmark’s FDM —called the tariffs a “mistake” and pushed for a diplomatic solution.
It’s no coincidence that German carmakers are particularly worried: a third of their sales in 2024 took place in China, their second most important market after the United States. A trade war with Beijing would therefore pose a huge risk for brands like Volkswagen, BMW, and Mercedes.
Toward normalization?
If the minimum price agreement materializes, it would represent a major compromise—and potentially a model that could be replicated in other sectors. It would also be a sign that, despite ongoing tensions, the EU and China are still capable of dialogue to protect their respective economic interests.
It remains to be seen whether the initiative will actually be implemented—and above all, whether it can balance the interests of European manufacturers with those of consumers, who are increasingly drawn to Chinese electric cars for their competitive prices and growing quality.
In the meantime, all eyes remain on the negotiations. The outcome could reshape the rules of the global electric vehicle market.
