China & EU: Could Minimum EV Prices Replace Tariffs?
The European Union and China have agreed to explore setting minimum prices on Chinese-made EVs instead of tariffs according to Reuters.
Negotiations are set to start immediately according to China’s Ministry of Commerce.
In October 2024, the EU increased tariffs on Chinese-built EVs, including 17% on those made by BYD and 35.3% for SAIC, on top of its standard car import duty.
If agreed, minimum prices could replace these.
This comes as US President Donald Trump is engaging in trade wars around the world, including a 125% tariff on Chinese goods and 20% on those from the EU – on 9 April it was announced these would be paused for 90 days.
President Hildegard Müller of German auto association VDA said on 2 April that the tariffs “represent the US's departure from the rules-based global trading order - and thus a departure from the foundation for global value creation and corresponding growth and prosperity in many regions of the world.
“The announced measures also represent a massive burden and challenge for both companies and the global supply chains of the automotive industry.”
EV trade between the EU and China
More than 50,000 BEVs were shipped from China to the EU in January and February of 2025 according to customs data.
Plug-in hybrids, which avoided EU tariffs, surged 892% in the same period to 25,900 units.
Chinese brands like BYD held 8% of the EU BEV market in 2023, but growth has slowed since the EU’s 2024 tariffs.
Just 11,499 BEVs were exported from the EU to China in 2023, and trends suggest this stagnation will continue.
Some Chinese firms are moving to local production in the EU, with BYD expected to begin construction on a plant in Hungary later in 2025.
What could minimum prices mean?
Minimum prices on Chinese-made EVs would prevent them undercutting EU manufacturers, but could also reduce affordability for consumers.
European automakers, like Volkswagen and Stellantis, struggle to match China’s cost advantages, sometimes facing 30-40% higher production costs due to subsidies.
However, German automakers oppose tariffs and there are fears of Chinese retaliation on premium exports.
A minimum pricing deal could further harm Tesla that has seen a substantial decline in European sales already.
The company risks losing further ground in the EU if Chinese vehicles were to achieve higher sales through a deal.
How could China EU EV trade impact the environment?
Transport was responsible for around a quarter of the EU’s total CO₂ emissions in 2019, and nearly 72% of this came from road transportation according to the European Environment Agency.
Higher prices on Chinese EVs increase costs and could dampen EV adoption rates, prolonging reliance on combustion engine vehicles.
New EU rules require 50% recycled lithium in batteries by 2027, rising to 80% by 2031, which will reduce reliance on raw material mining but could strain global supply chains already adjusting to tariffs.
Chinese companies producing EVs in the EU are expected to reduce shipping emissions, but their overall environmental impact will depend on the energy mix used in manufacturing.
The EU is also fearful of a collapse of its clean energy technology industry due to Chinese imports.
While protecting domestic green technology could accelerate innovation, it may also risk trade fragmentation.
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