EU Prepares Safeguard Measures Capping Chinese Hybrid Vehicle Imports

• The EU is preparing safeguard measures targeting Chinese hybrids, potentially using tariff-rate quotas to limit imports, according to Bloomberg.
• Hybrids would serve as a test case for the EU's trade rebalancing efforts, with the measures potentially extended to other sectors.

The European Union is preparing to cap imports of China-made hybrid vehicles to narrow its trade deficit with China, potentially widening a dispute over automotive trade.

The European Commission, which handles trade matters for the EU, is preparing safeguard measures following a surge in sales of China-made hybrids in Europe, Bloomberg reported on Wednesday, citing people familiar with the matter.

Safeguard measures allow the EU to restrict products from a sector following a surge in imports. One option is to use tariff-rate quotas, which impose a levy on imports above a certain volume, according to the report.

The proposed import restrictions would be time-limited, the people said. The report did not disclose specific quotas, tariff rates or an implementation date, and the plans could still change.

EU trade commissioner Maros Sefcovic will travel to Beijing later this week for talks with Chinese Commerce Minister Wang Wentao, and the outcome could influence the plans, Bloomberg said.

The commission intends to use hybrids as a test case and, if the measures prove successful, could extend them to other sectors where the bloc sees trade imbalances, according to the report.

The move signals that the EU is preparing tools to restrict imports itself after previously seeking voluntary export restraints from China.

The Financial Times reported on September 17 that the EU wanted China to voluntarily limit hybrid vehicle exports to the bloc or potentially face higher tariffs.

China's Commerce Ministry responded on September 18 that so-called voluntary export restraints seriously violated World Trade Organization (WTO) rules and ran counter to market principles and fair competition, expressing firm opposition.

Any solution between China and the EU must balance their interests, comply with WTO rules and their respective domestic laws, and fully take into account the interests of industries on both sides, the ministry said at the time.

Hybrids have become a new flashpoint in the China-EU automotive trade dispute. The EU has imposed countervailing duties on China-made battery electric vehicles, but hybrids currently face no equivalent additional levies.

The EU imposed definitive countervailing duties on Chinese-made battery electric vehicles (BEVs) in October 2024 for a period of 5 years.

The additional rates set at the time ranged from 7.8% to 35.3%. Combined with the existing 10% standard import tariff, the highest total rate reached 45.3%.

EU imports of hybrids from China rose from 3,800 vehicles in October 2024 to 50,000 in July 2026, while average prices fell over the same period, according to the Financial Times' September report.

Chinese brands captured a record share of nearly 12% of Europe's new car market in August and accounted for roughly 1 in 3 plug-in hybrid sales in the region, Bloomberg reported.

The potential automotive restrictions are part of a broader EU effort to rebalance trade relations with China. The bloc's trade deficit with China exceeds €1 billion a day, according to Bloomberg.

EU leaders will discuss trade relations with China and potential new tools in mid-October. The commission plans to present a series of measures by the end of the year to address trade imbalances and diversify the bloc's supply chains.