BERLIN, Germany: Talks between the EU and China could pave the way for a shift from tariffs to minimum price agreements on Chinese electric vehicles, as both sides explore a possible resolution to their trade dispute.

The European Commission confirmed on Thursday that discussions are underway about setting minimum prices for Chinese-made EVs instead of continuing with tariffs imposed by Brussels last year.

EU trade commissioner Maros Sefcovic and Chinese Commerce Minister Wang Wentao held talks in the past 24 hours, where they agreed to explore the option, a Commission spokesperson said. China's Commerce Ministry also issued a statement saying negotiations would begin immediately.

The European Union raised tariffs on Chinese EVs to as much as 45.3% in October, citing concerns about state subsidies. Tariff rates included 17.0% for BYD, 18.8% for Geely, and 35.3% for SAIC, in addition to the EU's standard 10% import duty on cars.

Now, the focus has shifted to so-called price undertakings — minimum prices that could serve as a substitute for tariffs. Sefcovic has said that.

Any such arrangement must be "effective and enforceable" to be viable

However, EU officials have previously noted that price undertakings have mainly been used for uniform goods, such as steel or solar panels, and may be difficult to apply to complex products like electric vehicles.

The talks follow Beijing's retaliatory trade actions, including tariffs on French cognac, which have impacted European exporters like Hennessy, Remy Cointreau, and Pernod Ricard.

German carmakers and industry groups have welcomed the latest developments. The German auto industry association VDA called the initial EU tariffs a "mistake" and emphasized the need for a negotiated solution.

"Regardless of current global developments, how to reduce obstacles and distortions in international trade, rather than building new hurdles, must also be discussed here," the VDA said this week.

China remains a critical market for Germany's auto industry, accounting for about a third of total sales. Many German manufacturers have voiced concerns that prolonged trade tensions could harm their business in the country, which is their second-largest trading partner after the United States.