The EU measure was met – China received an ultimatum

The European Union has asked China to voluntarily limit hybrid car exports to Europe as part of a deal aimed at avoiding a trade war. Tells about it Financial Times.

European car manufacturers have started mass layoffs, and one of the reasons is that cheap Chinese models are flooding the market. The EU wants China to limit its own exports before the EU imposes higher tariffs on cars.

“If they don’t limit their exports to our market, we will,” the EU official stated.

“It’s about stopping the flight of industry and the government from trade.”

The EU is seeking a commitment from China that would limit the share of hybrid vehicles manufactured in China to around 15 percent of the EU market instead of the current more than a third.

The EU’s trade balance deficit with China has already risen to one billion euros per day. President of the EU Commission Ursula von der Leyen stated in his speech that a critical turning point has been reached and the “second China shock” is already here. He emphasized that the EU uses all means to balance relations.

With its proposal, the EU hopes to repeat the agreement made with Japan in 1986, in which Japan agreed to voluntary restrictions on car exports. This encouraged Japanese companies, such as Toyota, to invest in the EU region or cooperate with local manufacturers. The agreement continued until 1999.

The pressure is on

In October 2024, the EU imposed tariffs of up to 45 percent on Chinese electric cars, prompting China to retaliate against European cognac, meat and dairy products.

After the growth of the import of fully electric cars leveled off, the import of Chinese hybrid cars turned to a sharp increase. Hybrid cars are subject to a 10 percent duty. Car manufacturers such as Volkswagenhave demanded punitive duties for hybrid cars as well.

EU trade commissioner Maroš Šefčovič meet the Chinese Minister of Commerce Wang Wentaon before his trip to Beijing in October.

China denies using state subsidies and explains its prices by the efficiency of its companies. In the negotiations, China demands EU countries to abandon export restrictions and sanctions against Chinese companies.