China Agrees To Discuss EV Tariffs With EU, Germany Welcomes It As ‘First Step’ But Says ‘Many More Will Be Necessary’

China has agreed to engage in discussions with the European Union regarding the elevated tariffs on Chinese electric vehicle imports.

What Happened: China has consented to enter into talks with the EU over the increased tariffs on Chinese EV imports, as reported by the Financial Times on Sunday. The announcement was made during a visit to Beijing by Germany’s Vice-Chancellor, Robert Habeck, who is working to alleviate the strained relations between the two economic powerhouses.

Habeck welcomed China’s decision to enter discussions with Brussels on EU tariffs but emphasized that it was “a first step and many more will be necessary.”

Habeck, who is also the Minister for Economic Affairs and Climate Action, expressed his approval of China’s willingness to engage in discussions with the EU. He noted that this is just the beginning and more steps are required to resolve the issue.

The decision to initiate consultations was disclosed following a video conference between China’s Minister of Commerce, Wang Wentao, and the EU’s Executive Vice-President and Trade Commissioner, Valdis Dombrovskis.

Germany, a key player in the EU, has been critical of the increased tariffs on Chinese EV imports, given the country’s importance for the German car industry.

Habeck also raised concerns about China’s growing exports of ‘dual-use’ goods to Russia, which have potential military applications.

“I looked at the trade figures and Chinese trade with Russia increased more than 40% last year,” he said. “Of course energy is a high part [of] it, but something like half of it is related to dual-use goods. These are technically goods that can be used on the battlefield and this has to stop.”

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Why It Matters: The context of these talks is crucial, given the broader international landscape. As reported recently, Canada has also been considering imposing tariffs on Chinese-made electric vehicles, following similar moves by the U.S. and the EU. This could significantly impact the global EV market.

China has invested over $230 billion in its electric vehicle industry over the past decade, according to a study by the Center for Strategic and International Studies. This financial backing has played a critical role in the rapid growth of China’s EV sector.

In response to the EU’s tariffs, Chinese carmakers have reportedly urged Beijing to increase tariffs on European gasoline-powered cars. This potential retaliatory measure underscores the escalating trade tensions between China and the EU.

Moreover, China’s Ministry of Commerce has accused the EU of “intimidating and coercing Chinese enterprises,” warning of a potential trade war. This was highlighted during Habeck’s visit to Beijing on Friday.

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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote