Trump’s tariffs could be good news for Chinese EVs in Europe – here’s why

Citing unfair subsidies, the EU imposed provisional tariffs on Chinese BEVs in July 2024, ranging from 20% to 30%, depending on the manufacturer. The measure was designed to prevent cheap Chinese BEVs flooding the European market, and to support domestic car makers. Later last year, China responded by imposing tariffs on specific categories of EU exports, such as French cognac.

Tariff victims
Then came 2 April 2025, ‘Liberation Day’, when Trump imposed trade tariffs on virtually all countries in the world (Russia being one notable exception). The minimum rate is 10%, but it’s 20% on EU goods and a whopping 145% on Chinese exports to the U.S.

It stands to reason that the victims of Trump’s tariffs want to increase trade among each other to mitigate the negative effects of the American trade war on the rest of the world. That’s why China and the EU last month agreed to resume trade talks. As a gesture of mutual good will, China removed tariffs on some EU products, and the EU said it would consider minimum pricing on Chinese BEVs as an alternative to the tariffs that are still in place.

Two components
With talks on minimum pricing said to be progressing, that plan is likely to have two components:

The EU would set a floor price for Chinese BEVs imported into the EU, below which they cannot be sold. This would solve the EU’s problem with the price of Chinese BEVs, which it says is so low because of unfair subsidies by the Chinese government.
China would be encouraged to invest in EU-based production facilities. This would weave Chinese BEV production into the fabric of the European economy, benefiting employment, and ensuring compliance with EU rules.
Consumers would still pay a higher price for the imported vehicles, but the difference would be smaller, and – unlike the current tariff regime – it would directly benefit the Chinese manufacturers. Meanwhile, minimum pricing would protect European manufacturers, and more Chinese factories in Europe would help the EU economy and strengthen its BEV supply chain.

New Best Friends
Overall, this would increase the flow of BEVs onto the EU market, and speed up the energy transition of mobility in the EU. Not to mention that it would appease the trade tensions between China and the EU, who both need a New Best Friend on the world economic stage.

By addressing both parties’ core concerns—market protection for the EU and export viability for China—the mechanism offers a mutually satisfactory solution. However, it should be noted that no final agreement has yet been reached. If it did, what would it mean for the market share of Chinese BEVs in Europe?

In 2024, about 20% of all new car registrations in the EU were EVs (i.e. BEVs plus PHEVs). About 10% of those EVs were Made in China. For China, the EU is the destination of 10% of its EV exports. Minimum pricing will allow Chinese manufacturers to continue growing its market share in the EU, which according to some projections could be between 15% and 20% as early as 2028, and up to 25% by 2035.

Shaky projections
However, projections that far into the future are shaky at best. It would require the Chinese manufacturers to navigate the complex labyrinth of EU regulations successfully, and weather the inevitable counterattack by Europe’s own legacy manufacturers.

Much also depends on the longevity of Trump’s trade war. The U.S. president has been known to radically change course on important topics, so there is a chance that this war will be over by the time its effects start to bite the U.S. consumers. On the other hand, using tariffs as an instrument of international trade policy is one of the few things he has consistently advocated for over decades.

So, if the trade war between the U.S. and the rest of the world continues, it is increasingly likely that the one between the EU and China will be resolved – something which consumers and corporate fleets will benefit from in the form of better access to cheaper Chinese BEVs.