The European Union is preparing restrictions on Chinese hybrid cars amid rapidly growing sales in Europe

The European Union is preparing temporary restrictions on imports of hybrid cars produced by Chinese companies, against the backdrop of their rapidly growing share of the European market and the widening trade deficit in relations with Beijing. The measures could take the form of tariff-rate quotas, which would impose additional customs duties on imports exceeding a certain volume.

The plans are not final and could be modified following trade discussions that European Commissioner for Trade Maroš Šefčovič will hold in Beijing this week with Chinese Commerce Minister Wang Wentao. The outcome of the negotiations could influence both the adoption of the restrictions and their form.

Chinese brands accounted for a quarter of hybrid car sales in Europe in August and one-third of the plug-in hybrid vehicle market. Their share of total new-car sales reached nearly 12%, a record level.

Hybrid cars are currently not subject to the higher tariffs imposed by the EU on electric vehicles produced in China. Brussels is examining the hybrid sector as a possible model for trade measures later applied to other industries. European officials are also seeking to limit the risk of retaliation from Beijing.

Shares in European carmakers rose after the reports emerged: Renault by as much as 6.1%, Volkswagen by 4.6%, and Mercedes-Benz by 2%. The EU's trade deficit with China exceeds one billion euros a day, and European leaders are expected to discuss new trade instruments at the October summit.