China grants automotive manufacturers some flexibility in EU tariff agreements

China's Ministry of Commerce is giving electric car manufacturers affected by the EU's special tariffs more flexibility in negotiating individual tariff agreements with the European Commission. This makes further deals like Cupra's more likely.

Cupra tavascan min — Symbolic image: Curpa logo
Image: Cupra

Just days ago, the EU Commission granted Cupra, a subsidiary of Volkswagen, an exemption from the tariffs in exchange for agreed minimum prices, import quotas for the China-imported Tavascan model, and additional measures. The company is also required to submit detailed sales reports, permit inspection visits, and consult the EU Commission if any difficulties or questions arise. Among these “commitments” is a pledge to undertake battery-electric vehicle (BEV)-related investment projects in the EU. All the details are outlined in this article.

Due to these conditions, it initially remained unclear whether other manufacturers would follow the example of VW Anhui as the producer and Seat/Cupra as the importer, particularly among Chinese brands. After all, the Chinese government had previously stated that it did not want individual agreements between the EU and companies, but rather a universally applicable solution.

However, a partial U-turn has now taken place: a ministry spokesperson stated on Thursday that there is hope more Chinese companies will agree on minimum prices with the Commission. China aims to maintain dialogue with the European Union, raising hopes for a negotiated solution while simultaneously blocking individual deals.

The EU Commission laid the groundwork for these individual agreements in January, when it presented its proposals for minimum prices. These measures aim to offset the effects of Chinese subsidies, which initially led to the introduction of special tariffs in 2024. Depending on the identified subsidy, an anti-dumping duty of up to 35.3% is levied in addition to the 10% import tariff when a battery-electric vehicle manufactured in China is imported into the EU.

This affects all manufacturers that produce electric vehicles in China and intend to import them into the EU, not just Chinese brands. This includes Volkswagen with the Cupra Tavascan built in Anhui, BMW with the now-discontinued iX3 from Shenyang, the Smart models from the Geely-Mercedes joint venture, and Polestar vehicles manufactured in China. In addition to pursuing a political solution, a legal route is also being explored: several car manufacturers, including BMW, have filed a complaint against the tariffs with the European Court of Justice.

reuters.com, handelsblatt.com (in German)