EU limits Chinese hybrid EV imports to 350,000 annually

The European Union has agreed to cap imports of hybrid electric vehicles from China at 350,000 cars annually, a move aimed at addressing a growing trade imbalance and concerns over deindustrialization. The four-year agreement, confirmed by the European Commission, is expected to take effect in December and aims to halve China's current 6% market share in the EU.

Imports of hybrid vehicles from China have surged in the past two years, with approximately 800,000 battery and plug-in hybrids anticipated to be sold in the EU this year. Under the World Trade Organization's safeguard measures, any vehicles exceeding the quota will not face tariffs but will be blocked at European customs docks. Vehicles assembled within the EU, such as those made in Hungary or Spain, will not be subject to the quota, though EU companies manufacturing cars in China will be included.

As part of the deal, China has also committed to reducing tariffs on certain auto parts and cutting duties by half on EU-sourced footwear, olive oil, and ice-cream. Officials emphasized that the quota has China's full support and that dialogue will continue on other products, including chemicals, renewable energy items, and furniture.

This agreement comes amid a significant trade deficit the EU is running with China, estimated at £1 billion (€1.18 billion) per day. The EU's strategy has shifted from seeking to increase exports to China to curbing imports, driven by concerns about deindustrialization and job losses. Officials stated they are closely monitoring imports to understand the impact on domestic industries.