China and the European Union have agreed to engage in talks to try to resolve an escalating dispute over tariffs, the Chinese commerce ministry said late on June 22.

The New York Times reports that, with billions of dollars in trade at stake, China’s commerce minister, Wang Wentao, and Valdis Dombrovskis, the European Union trade commissioner, will hold discussions on the European Union’s plan for tariffs on electric cars from China, 

On the same day, Germany’s vice chancellor and economic minister Robert Habeck met with Chinese officials in Beijing, saying he hoped tariffs could be avoided, and that the EU was willing to hold consultations.

Earlier in June, the European Commission, the executive body of the EU, announced plans for tariffs of up to 38% on electric cars from China, on top of an existing 10% on all imported cars. The EC cited heavy government subsidies on cars made in China.

Read More: Chinese Carmakers Call for 25% Tax on Large European Cars

 “These tariffs are not punitive,” Habeck said after the Beijing meetings, arguing that the tariffs are intended to offset subsidies that violate World Trade Organization rules.

The National Development and Reform Commission, China’s top economic planning agency, said in a statement that “China will take all measures to safeguard the legitimate rights and interests of Chinese companies.” It added that the tariffs were inconsistent with international efforts to address climate change.