EU, China Reach Initial Trade Deal On Hybrid Car Imports

The top trade envoys for China and the European Union agreed on Friday on a broad initial deal following two days of talks aimed at calming escalating tensions over trade imbalances.

European Commissioner for Trade Maros Sefcovic announced the agreement, stating it could cut up to 50% of Chinese electric and plug-in hybrid vehicle imports to the EU over four years, measured against 2026 volumes. Sefcovic said this step prevents several millions of car exports from China to the European Union. The deal also includes lower tariffs for some European goods to China and measures to stabilize rare earth supply chains.

China's Commerce Ministry posted online that Chinese Commerce Minister Wang Wentao expressed concerns about the EU's recent restrictive measures, stating China is a partner in solving problems, not the root of the EU's issues. Sigrid de Vries, head of the European Automobile Manufacturers' Association, said the deal appears to avert further instability and can help facilitate an orderly transition for Chinese presence in the European market.

The agreement also covers reducing Chinese import duties on €4 billion ($4.5 billion) worth of EU exports, including car parts, olive oil, and footwear. China committed to simplifying the process for granting export licenses for rare earths and permanent magnets. The deal requires approval from leaders across the 27-nation EU, with Sefcovic briefing them next week in Brussels. China's trade surplus with the EU hit 360 billion euros ($403 billion) last year.