China, EU Reach Deal to Cut Hybrid Car Exports
China and the European Union have reached a trade understanding that could cut Chinese exports of hybrid and plug-in hybrid cars to the bloc by more than half, while both sides agreed to continue talks over their wider electric vehicle dispute.
China-EU deal targets hybrid vehicle exports
The understanding would reduce Chinese hybrid and plug-in hybrid exports to the EU by several million vehicles over four years.
The agreement follows months of negotiations aimed at addressing the EU’s growing trade deficit with China and rising concern over the impact of Chinese vehicle imports on European manufacturers.
Imports of plug-in hybrids into the EU rose sharply in the year to September, while prices fell significantly, increasing pressure on European carmakers.
EU gains wider market access in China
China and the EU also reached understandings that could improve access to the Chinese market for around €4 billion worth of European goods, including car parts, olive oil and footwear.
Beijing also agreed to continue facilitating export licences for rare earths and permanent magnets through a streamlined approval mechanism.
The two sides will continue discussions on price undertakings as a possible alternative to tariffs imposed on Chinese electric vehicles.
EV tariff dispute remains unresolved
The broader trade dispute began after the EU imposed additional tariffs on Chinese electric vehicles in 2024 following an investigation into state subsidies.
China subsequently introduced measures affecting European brandy, pork and dairy products, while also tightening controls on some critical mineral exports.
European officials described the latest agreement as an important first step rather than a final settlement. Further talks are expected, including discussions in early 2027, as both sides seek to rebalance their trade relationship.
