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China and the European Union have agreed on a new measure to settle disputes over Beijing’s massive state aid to its electric vehicle (EV) makers.
The European Commission (EC)—the EU’s executive arm—
released a guideline document on Jan. 12 for EV exporters based in China on submitting price undertaking offers, which could replace the steep tariffs imposed in October 2024 by the EC.
Each price undertaking offer “must be adequate to eliminate the injurious effects of the subsidies and provide equivalent effect to duties,” the EC said in the document.
In the submissions, Chinese auto exporters are required to detail the minimum import price, sales channels, and how they can “present a lower risk of cross-compensation,” the EC said.
The EU will also evaluate any commitment by Chinese automakers to investing in battery EV-related industries within the 27-nation bloc, it added.
The EU “will conduct each assessment in an objective and fair manner, following the principle of non-discrimination and in accordance with [World Trade Organization] rules,” the EC said in a statement.
In an online
statement, China’s Ministry of Commerce said the progress “fully reflects the spirit of dialogue and the outcomes of consultations” between Beijing and Brussels.
“This is conducive not only to ensuring the healthy development of China-EU economic and trade relations, but also to safeguarding the rules-based international trade order,” the ministry said.
In October 2024, the EU agreed on a
plan to impose tariffs of up to 45 percent on Chinese EVs, in the highest-profile trade measure against the regime in more than a decade.
Brussels’s decision came after a year-long investigation that found that carmakers in China benefit from massive state subsidies that threaten to harm the European homegrown auto industry.
The EU’s decisions align with those of the United States and Canada.
As more countries take action against China’s unfair trade practices, Mario Draghi, former head of the European Central Bank, warned in his 2024 landmark report that Chinese overcapacity in EVs and other green technologies would be redirected toward the EU market.
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According to the EC, the market share of Chinese EVs has
risen from 1 percent in 2021 to 20 percent in 2023. The surge triggered concerns reminiscent of the EU’s past experience of being dumped with below-cost solar panels from China more than a decade ago. The influx of Chinese solar panels, which remains high today, has led to job losses and
bankruptcies among EU competitors.
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The EU aims to avert a similar scenario for its EV producers. The EU automotive industry is
responsible for nearly 14 million jobs, roughly 6 percent of the bloc’s total employment.
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The EC has made it clear that extra duties on Chinese EVs are not intended to completely block their entry into the EU market. Rather, these tariffs are
designed to address the “substantial unfair competitive advantage” that Chinese automakers have due to state-subsidy schemes.
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The Chinese regime has repeatedly opposed the EU’s decision and launched its own investigations into various products imported from the bloc, such as
brandy and pork, which analysts
say are intended to pressure Brussels into softening its stance.
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In late December 2025, China
announced that importers of EU dairy products will have to pay a deposit of as much as 42.7 percent. The move came less than a month after Beijing imposed tariffs on European pork and pig byproducts, ranging from 4.9 percent to 19.8 percent.
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The levies, which are lower than the preliminary rates
announced in a September ruling, will remain in place for five years.
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Udumbara
