CHINA and EU have agreed to negotiate a possible compromise concerning the tariffs EU previously planned to impose on Chinese electric vehicles (EVs), the Beijing-based Global Times reported.

The European Commission said June 12 that it will impose extra duties of 17.4% to 38.1% on imported Chinese electric cars from July 4, while the bloc investigates what it says are excessive and unfair subsidies. That’s on top of the 10% duties for all imported EVs, including Tesla.

The European Commission said it would host technical talks with Chinese officials in Brussels this week.

“The EU side has emphasized that any negotiated outcome of the investigation must be effective in addressing the subsidization,” a Commission spokesperson said.

China has repeatedly called on the EU to cancel its tariffs, expressing a willingness to negotiate.

The country does not want to be embroiled in another tariff war, still stung by U.S. tariffs on its goods imposed by the Trump administration, but says it would take all steps to protect Chinese firms should one happen.

The European Commission is set to make a final decision on tariffs by Nov. 2 at the end of the anti-subsidy investigation.

Siegfried Russwurm, head of Germany’s biggest industry association BDI, said it was a “good sign” both sides would hold talks.

“You know the old saying: as long as there are talks you’re not shooting at each other,” he told German public broadcaster Deutschlandfunk.

Russwurm, who also serves as chairman for German conglomerate and car supplier Thyssenkrupp, said tariffs were the last thing Germany needed as a major exporting nation.

China has rejected accusations of unfair subsidies, saying the development of its EV industry has been the result of advantages in technology, market and industry supply chains.

“When European Commission President Von der Leyen announced she would investigate China’s new energy vehicles ... I had an intuitive feeling it was not only an economic issue but also a geopolitical issue,” said Zhang Yansheng, chief research fellow at the China Center for International Economic Exchanges.

Although calling for talks, Beijing has also indicated it has retaliatory measures ready if the EU does not back down, and that it considers Brussels wholly responsible for the escalating tensions.

China has opened an anti-dumping investigation into EU pork imports. The Global Times said China was also teeing up an anti-subsidy investigation into European dairy goods and tariffs on large-engined petrol cars.

“It seems probable that Beijing will raise tariffs up to 25% for Europe-made cars with 2.5 or above liter engines,” said Jacob Gunter, lead analyst at Berlin-based China studies institute MERICS.

(SD-Agencies)