A tariff built from a subsidy finding, now optional
In 2024 the European Union finished an investigation and decided Chinese electric car makers were receiving government support that let them undercut European competitors, called a subsidy. It responded with a duty, a tax charged at the border on a car coming in from another country. Every imported car already pays a standard duty of 10%. On top of that, the European Union now charges Chinese battery electric vehicles, cars that run on a battery alone with no petrol engine, an additional duty of 7.8% to 35.3%, depending on the manufacturer. Added together, a Chinese battery electric vehicle can pay 17.8% to 45.3% at the border today, a total MAOWCE calculated by adding the European Union own 2 published figures, since the European Union states them separately rather than as 1 combined number.
These 3 bars are not additive against each other. A manufacturer at the high end pays 45.3% in total, the standard 10% plus its own additional 35.3%, not the sum of all 3 bars shown.
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| Standard duty any country | 10 |
| Additional duty lowest maker | 7.8 |
| Additional duty highest maker | 35.3 |
Chinese electric car makers can now trade that duty for a price floor
On January 12, 2026, the European Union published guidance letting a Chinese electric car maker propose something different, called a price undertaking, an agreement to sell a specific car model above an agreed minimum price instead of paying the extra duty on it. The price has to be set model by model, based on what the first buyer inside the European Union pays, and a maker cannot move money between models to cover a low price on one with a high price on another. Less than a month later the offer stopped being theory. On February 10, 2026, the European Union accepted its first case, the Volkswagen joint venture in Anhui, China, for the Cupra Tavascan, a battery electric sport utility vehicle sold through SEAT in Martorell, Spain. The deal attaches 3 conditions, a minimum price, a limit on how many vehicles the company can import, and a commitment to invest in electric vehicle projects inside the European Union with set milestones. Miss a milestone or sell under the floor, and the European Union withdraws the deal and reinstates the duty retroactively, charging it back on cars already sold.
The saving may land in a factory account, not a government one
Bruegel, an economic research group, argues in its own analysis that a price floor does not necessarily lower what a European buyer pays, because the buyer was already going to pay roughly what the duty would have added. The difference is who receives that money. Under a duty, it goes to the European Union treasury. Under a price floor, it stays with the manufacturer, as margin. Bruegel calculates the European Union could give up about 2 billion euros a year in tariff revenue if price floors widely replace the duty, against Chinese battery electric vehicle imports it estimates at about 10 billion euros a year.
A calculation by Bruegel, not a European Union budget figure. States what could be given up if price floors widely replace the duty, not what has already been foregone.
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| Tariff revenue at risk | 2 |
| Chinese electric car imports | 10 |
China calls the swap practical, and its brands keep gaining European buyers
The Ministry of Commerce of China, in its own statement issued the same day as the European Union guidance, called the arrangement practical, targeted, and consistent with World Trade Organization rules, the global body that referees trade disputes between countries. Ministry officials said the guidance followed multiple rounds of consultation held under a framework the 2 sides agreed at a China and European Union summit. Chinese brands are not waiting on the outcome. They held 6% of European Union car sales in the first half of 2025, up from 5% a year earlier.