European Union and China reach trade agreement on electric vehicles and tariffs

Following two days of negotiations in Beijing, European Commissioner for Trade Maroš Šefčovič and Chinese Minister of Commerce Wang Wentao announced a significant trade agreement aimed at de-escalating tensions. The deal includes a cap on Chinese hybrid and plug-in hybrid vehicle imports into the European Union, limiting them to 350,000 units annually. This measure, set to take effect in December under WTO safeguard rules, aims to reduce the Chinese market share in Europe from 6% to 3%. Vehicles exceeding this quota will be held at customs rather than subjected to additional tariffs.

Beyond automotive restrictions, China has agreed to lower tariffs on European exports—such as olive oil, footwear, and ice cream—by 50%, alongside a total reduction in duties on European products worth 225 million euros. Additionally, the agreement facilitates easier access for EU countries to the Chinese market and simplifies the licensing process for Chinese rare earth mineral exports. The pact excludes Chinese vehicles assembled within the EU, such as those in Hungary or Spain, and focuses on vehicles manufactured in China. Both sides characterized the agreement as a vital first step toward resolving systemic trade imbalances, noting that the EU's daily trade deficit with China has reached approximately one billion euros since 2025.