China and Europe are talking again about tariffs on Chinese cars in the Old Continent. Brussels wants to finalise them on 2 November as soon as the Chinese government's European anti-subsidy investigation of domestic manufacturers is over, while Beijing would prefer the July provisional measures to be lifted and is asking for negotiations.

Finding an agreement seems complicated, however a small step forward has been taken. On Saturday, EU Commissioner Valdis Dombrovskis and Chinese Trade Minister Wang Wentao restarted talks.

The tariff war has already begun

China would also like to avoid tariffs in Europe because the US already has heavy tariffs on its imported products (tariffs introduced by the previous administration, Trump's). The EU's provisional tariffs (up to 38.1% on imported Chinese-made electric vehicles) will begin by 4 July and there could soon be an escalation of trade friction.

According to the Global Times, representatives of Chinese car manufacturers have reportedly asked the Chinese government to increase tariffs on European car imports into China, the world's second largest economy and first global car market. "It seems likely that Beijing will increase tariffs by up to 25 per cent for European-made cars with engines of 2.5 litres or more," Jacob Gunter, chief analyst at MERICS, a Berlin-based China studies institute, tells Automotive News Europe.

Politics or economics?

Europe seems unwilling to turn back and there are even those who speak of a 'geopolitical' issue, not an economic one. As quoted in Automotive News Europe, Zhang Yansheng, chief researcher at the China Centre for International Economic Exchanges, said: "When European Commission President Von der Leyen announced that she would investigate China's new energy vehicles, I had the intuitive feeling that it was not only an economic issue but also a geopolitical issue."

"Personally I think it is unfair to start a tariff war by only considering capacity utilisation rates and insufficient demand", he added.