Europe and China might finally be inching towards peace in their electric vehicle trade war - a clash that’s seen Chinese-made EVs hit with some pretty eye-watering EU tariffs.
The European Commission has dropped new guidance that could change things up. Instead of the heavy tariffs introduced in October 2024, which taxed Chinese EV imports by as much as 35%, carmakers like BYD, SAIC and Geely could soon agree to set minimum prices for their models. That could replace the current tariff system altogether.
In short, Chinese brands would get a break from the extra duties if they agree to limit how many cars they ship to Europe and stick to fair pricing that balances out the effects of government subsidies. The EU, meanwhile, says any deals will be carefully reviewed to make sure they line up with WTO rules and keep competition fair across the board.
Volkswagen has already made a move in that direction. The German giant offered to cap shipments of its China-built Cupra Tavascan and set a minimum European price after warning the 20%+ tariff was a serious threat to its business. That triggered a broader review of how other carmakers might reach similar deals.
China’s Chamber of Commerce says the talks are a good sign for building stronger trade ties - and the hope is that this compromise could cool tensions after more than a year of back-and-forth.
Despite the tariffs, Chinese carmakers haven’t exactly slowed down. Sales of Chinese EVs in Europe jumped an incredible 111% in May 2025, and experts predict exports to the EU could keep growing by around 20% a year through to 2028.
It might take months before anything’s finalised, but the EV trade standoff between Europe and China could finally be heading for a much-needed reset.