Mixed signals on EU EV deal

China and the EU may be close to reaching a deal over tariffs on Chinese EVs.

On Friday, Bernd Lange, the chair of the European Parliament’s trade committee, told a German broadcaster that Beijing and Brussels were approaching an understanding on price undertakings (Reuters 1):

• "We are close to an agreement: China could commit to offering e-cars in the EU at a minimum price."
• "This would eliminate the distortion of competition through unfair subsidies, which is why the tariffs were originally introduced."

Chinese state media reprinted Lange’s comments.

But then this happened: On Friday, China’s Ministry of Commerce announced it would widen its anti-subsidy probe into EU dairy products to target “additional EU subsidy programmes as well as those in Denmark, France, Italy and the Netherlands” (Reuters 2).

Get smart: By ramping up pressure on the EU dairy industry, Beijing may hope to tighten the screws and ensure a deal on EVs gets done.

• But if a deal is as close as Bernd Lange implied, Beijing's aggressive strategy may backfire.

Get smarter: If a deal on EVs does materialize, that could lay the groundwork for further EU-China trade cooperation against the threat of US protectionism.

Our question: Last month, a mutually acceptable deal on price undertakings seemed highly unlikely. What changed between then and now?