EU seeks China hybrid export curbs as auto trade tensions rise

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EU seeks China hybrid export curbs

Highlights

Brussels is pressuring Beijing to voluntarily limit China-made hybrid vehicle exports ahead of the EU-China talks in October 2024, threatening unilateral EU action if China does not comply.
Imports of Chinese hybrid cars to the EU surged from 3,800 in October 2024 to 50,000 in July 2026 as average prices dropped and current tariffs remain at 10%.
EU faces a 1 billion euro-a-day trade deficit with China and is also demanding restraint in sectors like chemicals while urging Beijing to buy more European goods.

Trade proposal ahead of October talks

As first reported by the Financial Times, Brussels is asking Beijing to accept voluntary restraints on exports of China-made hybrid vehicles as part of a broader effort to avoid a deeper trade confrontation.

EU officials argue that cheaper Chinese models are intensifying pressure on European manufacturers, which are already making mass lay-offs. One EU official says the bloc will act on imports itself if China does not limit shipments, describing the approach as an effort to stop deindustrialisation and manage trade more tightly.

Brussels is also seeking restraint in other sectors, including chemicals, and wants China to buy more European goods. The EU set an October deadline in June for tangible progress in narrowing its trade gap with China, and the two sides are using the EU-China Trade and Investment Consultations forum to address market access and trade imbalances.

European Commission President Ursula von der Leyen says the EU's 1 billion euro-a-day trade deficit with China has reached a tipping point. Trade Commissioner Maros Sefcovic is due to speak with Chinese Commerce Minister Wang Wentao before traveling to Beijing in the second week of October, where he says he wants positive outcomes on rebalancing trade.

Hybrid import surge sharpens pressure

The EU is looking at a model similar to the arrangement Japan accepted in 1986, when Tokyo agreed to restrain vehicle exports to Europe, a policy that remained in place until 1999. That period helped encourage Japanese carmakers such as Toyota and Nissan to invest in the EU or work with local producers.

Pressure for stronger action has grown as imports of Chinese hybrid cars into the bloc reach a high in the second quarter, according to people familiar with the matter. While Brussels imposed anti-subsidy tariffs of up to 45% on Chinese electric cars in October 2024, hybrid imports face only a flat 10% EU tariff.

Imports of Chinese hybrids have risen more than tenfold from 3,800 vehicles in October 2024 to 50,000 in July 2026, while average prices have fallen. Carmakers including VW are calling for similarly tough duties on imported hybrid cars, and Germany and France are increasingly aligning behind more forceful action after years of division.

Industries including chemicals, cars and steel warn that Chinese competition is pushing them toward a tipping point. Beijing says its pricing strength reflects efficient companies rather than subsidies, and it is pressing EU countries to ease export controls and sanctions on Chinese companies during the talks.

Our earlier article on the EU’s push to rein in Chinese hybrid car exports explained how Brussels is seeking voluntary limits to prevent a wider trade clash and reduce what it sees as rising deindustrialisation risks. It also outlined the EU’s October deadline for tangible progress on narrowing the trade gap with China, as well as the role of Commission President Ursula von der Leyen and Trade Commissioner Maros Sefcovic in shaping the negotiating stance.

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