The EU and China seek an alternative solution to electric car tariffs

China and the EU hold talks to find a alternative solution that replaces tariffs recently imposed on Chinese electric vehicles. However, no agreement has yet been reached and negotiations are expected to continue. On Thursday, the spokesperson for China’s Ministry of Commerce responded to a journalist at a press conference, stating that the negotiations on the establishment of a minimum price Some progress had been made following concerted efforts by both parties.

China expressed hope that both sides would work together, being “pragmatic and balanced”, taking into account each other’s legitimate concerns, meeting the expectations of stakeholders in both China and the EU, and striving to achieve a satisfactory result.

“We are close to an agreement with China”

Earlier this week, the president of the European Parliament’s Trade Committee, Bernd Lange, stated in an interview that “we are close to an agreement”: China could commit to offering electric cars in the EU at a minimum price. “This would eliminate the distortion of competition through unfair subsidies, which is why tariffs were introduced in the first place.”

In September, the European Commission rejected proposals by Chinese electric vehicle manufacturers to set a minimum price. The Commission commented that the solution cannot “eliminate the harmful effects of subsidies.”

Rising trade tensions between the EU and China

The European Commission decided to increase the Tariffs on electric cars made in China up to 45.3% from October 30, after narrowly obtaining approval from all 27 EU Member States. The decision followed several rounds of proposed tariff reductions.

The tax on Teslas made in China has been reduced from 9% to 7.8%, after a previous cut of 20.8%. The tariff on the best-selling Chinese brand, BYD, stands at 17%. Tariffs on Geely have been reduced to 18.8% from 19.3%, while those on SAIC and companies that did not cooperate with EU investigations have been reduced to 35.3% from 36.3% .

China responds with tariffs on brandy

In retaliation, China announced that EU brandy importers will have to pay corresponding tariffs up to 39% starting October 11. The Commerce Ministry said Beijing was also considering raising tariffs on imported European gasoline cars with large engines. These announcements have pressured shares of European beverage companies and automakers.

In November, Pernod Richard SA shares plummeted 14% and those of LVMH fell 7%. Shares of major European car manufacturers, such as BWM, Porsche, Volkswagen and Mercedes-Benz, They fell between 8% and 12%. Most of these automakers have issued profit warnings, citing sluggish demand in China and economic headwinds.

Trump’s tariff challenges and the fall of the euro

Both the EU and China are in the US president-elect’s tariff listDonald Trump, which may prompt both sides to continue talks to ease trade relations. Europe has faced the challenges of China’s slowdown, domestic political turmoil and tariff threats from the US. Both the euro and European stock markets will end November on a negative note. The euro depreciated against the dollar 3%, approaching its lowest level in two years. On a monthly basis, the Euro Stoxx 50 index fell 4.4%, the CAC 40 fell 5% and the DAX fell 1.1%. Consumer stocks, especially those most exposed to Chinese markets, led the overall gains.

Trump’s victory made the Chinese yuan tremble

In China, the latest economic data showed signs of modest improvement despite ongoing stimulus measures. In the third quarter, China recorded GDP growth 4.6%, below the 4.7% of the previous quarter. Trump’s victory in the US elections also made its financial markets nervous in November. The Chinese yuan weakened by 1.7% against the dollar US, but strengthened 1% against the euro. Chinese benchmarks, the Hang Seng Index fell 5.3% and the China A50 fell 1.6%.