Navigating the shift from punitive tariffs to negotiated price undertakings.
Agreement on "Price Undertaking" Guidance
The European Commission and China's Ministry of Commerce have agreed on a procedural framework. This allows manufacturers to replace tariffs with minimum price commitments, pivoting from trade war escalation to regulated compliance.
Context: This follows Volkswagen's offer regarding its China-made Cupra Tavascan to avoid the 20.7% tariff.
Key Terms of Agreement
- ✓ Individual Offers: Manufacturers submit specific pricing plans per model.
- ✓ Injury Removal: Prices must be high enough to offset subsidy advantages.
- ✓ Strict Monitoring: Prevention of cross-compensation via Hybrid sales.
Timeline of Escalation
Investigation Launch
EC launches anti-subsidy probe into Chinese BEVs.
Definitive Tariffs
EU votes to impose 5-year duties up to 35.3%.
Guidance Agreement
Framework set for Price Undertakings to replace tariffs.
Current Duty Burden
Total rate = 10% Base + Countervailing Duty.
The "Hybrid Pivot" (2025)
As BEV tariffs hit, Hybrid imports surged 500% to bypass duties.
EU Market Share (H1 2025)
China-made EVs hold 6%, EU legacy brands hold 74%.
New Mechanism: Price Undertakings
1. Guidance
EU sets calculation rules.
2. Offer
Manufacturer commits to price floor.
3. Review
EC checks "injury elimination".
4. Resolution
Tariffs suspended.