It has been confirmed that China is accelerating tariff negotiations with the European Union (EU) in response to the EU's impending imposition of high tariffs on Chinese electric vehicles (EVs). At the same time, China appears to be moving towards comprehensive trade friction mitigation by hinting at the introduction of a "fast-track" to address EU concerns regarding its export controls on rare earth elements, which it considers a "strategic resource."

On June 7, 2025, the Chinese Ministry of Commerce announced the results of a meeting between Chinese Commerce Minister Wang Wentao and EU Executive Vice-President and Commissioner for Trade and Economic Security, Maroš Šefčovič, in Paris, stating that "negotiations between China and the EU on price undertakings related to electric vehicles have entered the final stage." The two sides intensively discussed pressing issues such as the EU's opposition to Chinese EV subsidies, China's anti-dumping investigation into EU brandy, and rare earth export controls. They particularly assessed that they had "taken another step in the right direction" toward resolving the EV issue.

 
EV Tariffs: Breakthrough Through 'Price Undertakings'?

The EU, judging that Chinese EVs, bolstered by massive government subsidies, are encroaching upon the European market and threatening the bloc's industrial base, initiated an "anti-subsidy investigation" into Chinese EVs in October last year. Based on the investigation's findings, the EU was expected to impose additional tariffs of up to 25% starting in July. This was seen as a symbolic event intensifying trade friction between China and Western countries amidst a global trend of escalating protectionism, following the United States' decision to impose 100% tariffs on Chinese EVs.

China has strongly opposed the EU's moves and threatened retaliatory measures. In particular, it initiated an anti-dumping investigation into French brandy, employing a strategy to pressure EU member states that were skeptical of imposing tariffs on Chinese EV imports. France is a major exporter of its brandy, while Germany, with its significant automotive exports to China, has sought to minimize trade friction with China.

It is noteworthy that both sides are discussing a "price undertaking" in these negotiations. A price undertaking is a measure where exporting companies agree with the importing government to increase export prices or limit export volumes when damage occurs due to dumping or subsidies. This can serve as an alternative to direct trade barriers like high tariffs while still protecting the importing country's industry. It raises the possibility that China might voluntarily increase the prices of EVs sold in the European market or limit export volumes above a certain level to alleviate the EU's concerns.

Of course, reaching an agreement through a price undertaking does not solve all problems. The EU Commission may proceed with its subsidy investigation into Chinese EVs as planned and impose provisional tariffs based on the outcome. However, the fact that both sides are seeking to avoid a full-blown trade dispute and exploring solutions through dialogue is seen as a positive sign.

 
Rare Earth Export Controls: Hinting at Easing with 'Green Channel'

The issue of rare earth export controls was also a major agenda item at the meeting. China, which holds a dominant supplier position in the global rare earth market, intensified its rare earth export control measures and delayed related export approvals in early April, as its trade war with the United States escalated. As a result, automotive and high-tech industries not only in the US but also in Europe have faced difficulties in procuring key components like rare earth magnets, amplifying global concerns about securing stable supply chains for rare earths, which are essential for producing various advanced products such as EV batteries, wind turbines, and smartphones. Rare earth elements, along with lithium and cobalt, are considered key minerals for the Fourth Industrial Revolution, especially as core materials for future industries such as EV motors, wind generators, and defense. China holds approximately 37% of the world's rare earth reserves and accounts for over 60% of production, making it a veritable "rare earth hegemon." Utilizing this dominant position, China has previously attempted to exert influence on the international community by controlling rare earth exports. 

The Chinese Ministry of Commerce stated that Minister Wang "attaches great importance" to the EU's concerns regarding rare earths and wants to establish a "green channel," or fast-track, to expedite approvals for eligible applications. This effectively signals that China may ease its rare earth export control policies, which is expected to have a positive impact on alleviating supply chain instability for the EU. However, specific details on what conditions must be met to utilize the "green channel" were not mentioned, suggesting that further discussions will be needed.

 
Complex Trade Issues Emphasize 'Working-Level' Discussions

Both sides stated that they have instructed the strengthening of "working-level" discussions to resolve the complex trade issues. This is a common negotiation approach where broad agreements are reached at high-level meetings, and then detailed matters are coordinated by working-level officials. With various contentious issues at hand, including EV tariffs, rare earth export controls, and new proposals for technological pathway discussions, close communication and technical and legal review at the working level are essential for finding practical solutions.

These negotiations between China and the EU are expected to serve as an important case study on how major economic powers will manage and resolve trade friction amidst the global spread of protectionism. In particular, with EVs being central to future mobility and directly linked to the industrial competitiveness of each nation, the international community's attention is focused on whether both sides can reach mutually acceptable solutions. The stable supply of rare earths is essential for the advancement of high-tech industries, making China's conciliatory stance and its impact on global supply chain stability an important point to watch.

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