The European Union will cap imports of hybrid and plug-in hybrid cars from China at 350,000 vehicles a year under a four-year arrangement reached after talks in Beijing. The measure is due to take effect in December and is intended to reduce China’s share of the EU hybrid market from 6% to about 3%.
The ceiling uses World Trade Organization safeguard rules, allowing Brussels to introduce it without the investigation required for an anti-dumping measure. Vehicles arriving above the limit will not face an additional tariff, but customs authorities will keep them at European ports rather than release them into the market.
The quota applies to Chinese-made vehicles, including cars built by European companies in China. Cars assembled within the EU, including production in Hungary and planned production in Spain, are excluded. China’s Commerce Ministry said the arrangement would preserve continued export growth, guarantee China a quota no smaller than that available to other sources and allow an upward adjustment from 2025 export levels.
The agreement follows a sharp rise in Chinese hybrid exports. The European Commission says the arrangement could prevent several million additional Chinese car exports over four years.
The trade package also includes improved Chinese market access for European goods, including lower duties on car parts and reduced tariffs on footwear, olive oil and ice cream. China also agreed to facilitate licensing for rare earths and permanent magnets, materials important to European technology and automotive supply chains.
The agreement emerged from three months of discussions led by European Trade Commissioner Maros Sefcovic and Chinese Commerce Minister Wang Wentao. Sefcovic described it as a first step toward addressing a trade gap exceeding €1 billion a day, while China said the deal would avoid further escalation and provide a more predictable trading environment. EU leaders are expected to consider the arrangement in Brussels, with further talks scheduled by video in January and in person in March.
The hybrid quota is part of a broader shift in Brussels toward monitoring and restricting import surges as concern grows over industrial capacity, supply-chain dependence and potential job losses. EU leaders are also due to discuss a French-German proposal for a mechanism that could restrict access to the single market during a harmful disruption, including a possible Chinese ban on rare-earth supplies.