China and the EU are set to discuss tariffs related to electric cars.

Negotiations between China and the EU over import tariffs on electric cars may be easing the risk of soaring prices in the EU. Both sides discussed the tariffs during a call on Saturday, agreeing to further talks despite ongoing tensions. This marks the first negotiation since the EU threatened tariffs up to 38% on Chinese electric vehicles (EVs), citing unfair subsidies from the Chinese government. China, in response, accused the EU of protectionism and violating trade rules.

A spokesperson from the EU described the call between Trade Commissioner Valdis Dombrovskis and Chinese counterpart Wang Wentao as “frank and constructive.” Both sides committed to continued engagement over the coming weeks. However, the EU reiterated its stance against what it views as harmful subsidies supporting the Chinese EV industry. China, in its statement, maintained its disagreement with the EU’s position.

In addition to the EU call, Wang met with German Vice-Chancellor and Federal Minister for Economic Affairs and Climate Action Robert Habeck, where China expressed firm opposition to the tariffs. China also reiterated its intent to defend its rights through potential action at the World Trade Organisation (WTO). Germany, which has voiced criticism of the tariffs, warned of potential consequences, labeling the EU’s proposed measures as risking a “trade war” with Beijing.

The proposed EU tariffs, ranging from 17.4% to 38.1%, would add to the current 10% tariff already imposed on all Chinese electric cars exported to the EU. This move by the EU follows the US decision to increase tariffs on Chinese electric cars from 25% to 100% last month.