Finance
EU sets out firm conditions for China EVs to avoid tariffs
Published by Global Banking & Finance Review®
Posted on January 12, 2026
2 min readLast updated: January 20, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on January 12, 2026
2 min readLast updated: January 20, 2026
The EU sets conditions for Chinese EVs to replace tariffs with minimum price commitments, impacting trade relations and protecting the EU auto industry.
By Philip Blenkinsop
BRUSSELS, Jan 12 (Reuters) - The European Commission set out the conditions on Monday under which China-based electric vehicle makers can replace EU tariffs with commitments to sell at minimum prices and said it would take into account Chinese EV investments in the bloc.
For Beijing, the tariffs of up to 35.3% on EVs are the biggest source of trade tensions with the European Union. Brussels, meanwhile, is seeking to protect Europe's auto industry from an influx of cheaper imports produced by the likes of BYD, SAIC and Geely.
The two sides have held a series of talks to seek an alternative to the levies.
China favours minimum price commitments from producers, and the Commission said that, following talks with the Chinese commerce ministry, it had issued written guidance on how minimum price offers could replace tariffs.
The EU executive is still requiring that any offered prices eliminate the harmful effects of subsidies, have an effect equivalent to duties, be practicable and minimise cross-compensation.
China has previously pushed for a broadly applicable minimum price. But the new guidance requires minimum prices for each EV model and configuration, referring to the sales price to the first independent consumer in the EU.
The guidance indicates it would be harder to accept undertakings from companies selling other vehicles, such as hybrids, into the EU due to the risk of cross-compensation. Chinese hybrid import volumes into the EU were five times higher in the first three quarters of 2025 than a year earlier.
The guidance also said the risk of cross-compensation would be lower if offers included commitments on sales volumes or applied for a limited period.
The Commission began a review last month of a minimum price and import quota offer made by Volkswagen to replace tariffs on the Cupra Tavascan electric SUV it manufactures in China.
China's commerce ministry broadly welcomed the guidance, saying the EU's adherence to non-discrimination and objective assessments showed both sides could settle differences through dialogue.
(Reporting by Philip Blenkinsop; Editing by Joe Bavier)
A minimum price offer is a proposal made by sellers, in this case, Chinese EV manufacturers, to set a price that avoids tariffs while addressing the impact of subsidies.
Cross-compensation refers to the practice of offsetting losses in one area by gains in another, which can occur in vehicle sales to meet pricing conditions.
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