China takes legal action against the EU over electric vehicle tariffs.

Beijing has responded strongly after the European Union (EU) imposed permanent tariffs on Chinese electric vehicle (EV) imports, ranging from 8% to 35%. These tariffs were introduced by the EU in an effort to protect European manufacturers from what it views as unfair competition, accusing China of selling EVs in Europe at artificially low prices. In retaliation, China has criticized the move, arguing that the duties could harm trade relations and hinder the global transition to clean energy. This dispute highlights the ongoing tension between China and the EU over trade practices and market access in the electric vehicle sector.

On Monday, China announced it had filed a formal complaint with the World Trade Organization (WTO) against the European Union’s decision to impose permanent tariffs on Chinese-made electric vehicles (EVs). This move comes after the EU finalized its decision last week to impose duties ranging from 8% to 35% on Chinese EVs. These tariffs followed a year-long investigation by the EU, which concluded that Chinese manufacturers had benefited from unfair government subsidies, allowing them to sell EVs in Europe at below-market prices.

In response, China’s Commerce Ministry stated that the lawsuit was filed to protect the interests of its electric vehicle industry and to support global cooperation in the transition to greener energy. Beijing argued that the EU’s anti-subsidy measures could hinder the development of the EV sector and global efforts to combat climate change, prompting China to seek resolution through the WTO.

A World Trade Organization (WTO) official confirmed that China has formally filed a complaint about the European Union’s (EU) new tariffs on Chinese electric vehicles (EVs). The complaint includes the EU's final and provisional countervailing duties and its investigation, which China had already contested in a dispute back in August. This complaint is part of rising trade tensions between China and the EU, as the EU imposes these duties to protect its own EV market from what it sees as unfairly subsidized Chinese imports.

In response, the EU is expected to send a negotiating team to China soon, aiming to reach a compromise. One potential solution could be for Chinese manufacturers to agree to minimum prices for their EVs, which would make the EU’s tariffs unnecessary.

China's request initiates a consultation phase with the EU, which is the first step in the WTO's dispute resolution process. This phase lasts 60 days, during which both sides will try to negotiate a settlement. If no agreement is reached, China can then request a WTO panel to decide on the issue. However, the WTO’s main appeals body is currently inactive because it lacks the judges needed to hear cases, due to a U.S. blockade over procedural concerns.

If needed, China and the EU could use an alternative system known as the Multi-Party Interim Appeal Arrangement (MPIA), which they both belong to, to handle their case. This back-up system allows disputes to be resolved despite the main appeals body being inactive.