EU asks China to cap hybrid exports or face higher tariffs

The European Union is asking China to voluntarily limit Chinese-made hybrid vehicles to about 15% of the EU market, down from more than one-third, to protect European automakers and avert a broader trade war. EU officials warned that the bloc could raise tariffs or impose other restrictions if Beijing does not curb shipments, while also urging restraint on exports of chemicals and other goods and greater Chinese purchases of European products. Imports of Chinese hybrids rose from about 3,800 in October 2024 to roughly 50,000 in July 2026, after the EU imposed tariffs of up to 45% on Chinese battery-electric vehicles while leaving hybrids subject to a 10% duty. The proposal echoes a voluntary export-restraint agreement the EU previously used with Japan, although China rejects claims that its industrial overcapacity reflects unfair trade practices. The dispute comes as the EU seeks concrete progress in reducing its large trade deficit with China and as European officials warn that continued import growth could accelerate deindustrialization.