Chinese electric car tariffs could be scrapped by the EU

Tariffs of up to 45 per cent on Chinese-made electric cars imported into the European Union may be replaced with a new ‘minimum pricing’ system after previously stalled discussions between the two trading partners were re-started.

A ‘minimum pricing’ arrangement – also referred to as ‘price floors’ or ‘price undertakings’ – between the European Union (EU) and China would see tariffs abolished and set minimum prices agreed upon.

According to Reuters, European trade commissioner Maros Sefcovic has said any new policy would have to be as effective as tariffs, given the approach has previously only been applied on ‘homogenous commodities’.

The tariffs – which only apply to battery-electric vehicles and not Chinese-made hybrids or other cars – have not stopped the growth of Chinese brands in Europe, with sales increasing 64 per cent (across all models, not only electric) in February 2025 alone.

Some of the cheapest electric cars on sale in the EU, even from European brands, are made in China and include the Citroen e-C3 and the Dacia Spring, neither of which are currently offered in Australia.

Yet sales of Chinese-made electric cars did fall 3.4 percent in February, however, while European battery-electric vehicles sales increased 26 per cent.

The return of the EU and China to the negotiating table last week was motivated by the need to respond to extraordinary tariffs between the United States (US) and China on all goods – including electric cars.

While some concessions from the US have allegedly been made – such as on electronics, although this is not confirmed – the rapidly changing trade battle has not seen tariffs on vehicles reduced at the time of writing.

The idea of minimum pricing was already being discussed as an alternative when the EU tariffs came into effect on October 31, 2024.

The tariffs came after an EU investigation declared the Chinese auto industry a significant threat to Europe’s car-making business, with state-support from the Chinese government enabling an ‘unfair advantage’.

Each Chinese car manufacturer was asked to submit details on its level of government support, which would determine the tariff rate for each brand.

Those who co-operated – and had less government support – like Tesla were given the lowest tariff, with the electric car maker given a 7.5 per cent rate.

The maximum tariff was dished out to car makers who failed to cooperate when asked for details, such as SAIC Motor – the parent company of MG and LDV brands – which was given a 38.3 per cent tariff on top of the standard blanket 10 per cent.

Tesla rival BYD saw 17.4 per cent applied to its electric vehicles.

Not all 27 member states voted in favour of the tariffs, with notable objections from Germany where Volkswagen faced closure of factories in its homeland for the first time in its history.

Around one-third of Germany’s annual auto exports – totalling 3.4 million last year – are sent to China, although its brands suffered dramatic falls in sales in late 2024.

BYD is currently constructing a factory in Szeged, Hungary – which last month saw the EU launch an investigation into alleged ‘unfair Chinese government subsidies”, according to Reuters. 

Hungary also voted against the tariffs with BYD’s investment announced in December 2023.

Those in favour included France – where the Renault-Nissan-Mitsubishi Alliance is headquartered – and Italy, home of Stellantis group which includes Fiat, Ferrari, Alfa Romeo, Jeep, Ram Trucks, Chrysler, Peugeot, Alpine and former General Motors brand and sister-company to Australia’s Holden, Opel.