China has signaled plans to impose tariffs up to 25% on imported cars with large engines from the US and EU, escalating trade tensions. The China Chamber of Commerce to the EU announced this potential move, which could significantly impact European and US automakers. Shares of companies like Mercedes-Benz and BMW fell in response. Beijing’s threat comes as the EU investigates China’s electric-vehicle subsidies, with possible tariffs this month. This investigation has strained EU-China relations despite President Xi’s recent visit to Europe. Most of China’s auto imports are luxury vehicles, and brands like Toyota, Mercedes, and Porsche could be affected. The Biden administration has already imposed 100% tariffs on Chinese electric cars, and the EU is scrutinizing Chinese subsidies across various industries. China's Foreign Ministry urged resolving such disputes through dialogue.