When a Chinese-made hybrid vehicle heads toward European shores, it may soon face more than just transportation costs—a staggering 45% total tariff rate could become the new trade barrier. This scenario reflects potential policy changes currently under consideration by the European Union.
The European Commission is reportedly evaluating imposing an additional 35.3% tariff on Chinese hybrid vehicles. Combined with the existing 10% import duty, this would create one of the highest tariff walls for automotive trade, significantly impacting Sino-European commercial relations.
Rationale Behind the EU's Proposed Tariffs
The EU's move follows a 155% surge in Chinese hybrid vehicle exports to Europe projected for 2025. European regulators suspect Chinese manufacturers benefit from state subsidies, creating what they view as unfair competitive advantages. There are also concerns that the hybrid vehicle export boom represents an attempt to circumvent existing anti-subsidy measures targeting pure electric vehicles.
This development continues trade tensions that began in October 2023 when the EU initiated anti-subsidy investigations against Chinese EVs. While a "price commitment" mechanism agreed on January 12, 2026, temporarily prevented additional tariffs (up to 35.3%) on Chinese battery-electric vehicles, hybrid models remain unprotected due to the technical challenges of case-by-case subsidy evaluations.
Growing Complexity in EU-China Trade Relations
The potential hybrid vehicle tariffs underscore the fragility of recent trade agreements between Brussels and Beijing. Despite temporary solutions in the EV sector, fundamental disagreements about industrial subsidies and market competition persist. The EU's stance reflects both growing protectionist tendencies and unease about China's rapid automotive industry advancement.
Parallel Protectionist Trends in the United States
Across the Atlantic, similar protectionist impulses are emerging. The Trump administration recently threatened 200% tariffs on French wine and champagne—retaliation for France's refusal to join the Gaza Peace Council and other diplomatic disagreements. The former president publicly warned that punitive tariffs would follow if France maintained its "hostile posture."
However, research from the Kiel Institute for the World Economy challenges the effectiveness of such measures. Analyzing over 25 million shipping records , their 2025 study found that 96% of the $200 billion in additional tariff costs were ultimately borne by U.S. importers and consumers, with foreign exporters absorbing only about 4%—directly contradicting Washington's claim that "foreigners pay the tariffs."
Legal Challenges to U.S. Trade Policies
The Trump administration's global tariff measures, implemented under the 1977 International Emergency Economic Powers Act , now face potential invalidation by the U.S. Supreme Court. A ruling is expected within weeks, with the case centering on presidential authority in trade matters.
U.S. Trade Representative Greer confirmed contingency plans should the Court strike down the tariffs. Alternatives include invoking the 1974 Trade Act for 15% temporary tariffs (valid 150 days) or applying the 1930 Tariff Act to impose duties up to 50% against countries engaged in discriminatory trade practices.
These developments in both Europe and America signal growing turbulence in global trade governance, where protectionist measures risk creating economic headwinds that could slow worldwide growth.