With billions of dollars in trade at stake, China and the European Union have agreed to talks to try to resolve an escalating tariff dispute.

China’s Ministry of Commerce said late on Saturday that Minister Wang Wentao and European Union Trade Commissioner Valdis Dombrovskis had agreed to launch consultations on EU tariffs on Chinese electric vehicles.

Hours earlier, German Vice Chancellor and Economy Minister Robert Habeck said the EU was willing to negotiate and expressed hope that tariffs could be avoided.

Habeck defended the EU tariffs in Shanghai after meetings with Chinese officials in Beijing, saying “these tariffs are not punitive” and noting they are intended to offset subsidies that violate World Trade Organization rules.

It is unclear what kind of trade deal the two sides will reach. Executives from Volkswagen and other European automakers have called on Chinese manufacturers to build cars in Europe, hire European workers and pay them European wages, rather than importing cars from China.

But Chinese automakers have built dozens of electric vehicle factories in China, receiving what the EU says are heavy subsidies, and are continuing to build more.

Before agreeing to the consultations late on Saturday, Chinese Commerce Minister Wang Wentao accused the EU of violating World Trade Organization rules during a meeting with Habeck.

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

The tariffs would put Germany in a tricky position as its automakers, which have extensive operations in China, worry they could be hurt by retaliatory trade actions from Beijing.

On Saturday, Habeck visited several economic ministries in Beijing but did not meet with Premier Li Qiang, China’s No. 2 official. He then flew to Shanghai for a news conference and met with German business leaders in Shanghai. He declined to comment on why he did not meet with Li Qiang, with whom he is in some ways a peer official.

Habeck criticized China for providing Russia with dual-use products for use in the war in Ukraine. He said that half of the more than 40 percent increase in trade between China and Russia last year was related to these dual-use products.

“These are all technology products that can be used on the battlefield, and this has to stop,” he said.

But the focus of Habeck’s trip was on the trade dispute. He visited BMW’s Shanghai research and development center on Sunday before heading to the nearby technology hub of Hangzhou.

World Trade Organization rules allow for tariffs designed to offset the impact of subsidies. China denies improperly subsidizing its electric vehicle companies and says its global leadership in the industry is the result of efficient manufacturing and innovation.

Chinese state media reported last week that China’s auto industry was asking the Ministry of Commerce to impose tariffs on gasoline-powered cars imported from Europe, a move that would mainly affect German automakers.

Commerce Minister Wang Wentao called on Germany to help end EU tariffs. “We hope that Germany will play an active role within the EU and push the EU to move toward China,” China’s Ministry of Commerce said in a statement on Saturday.

China, the world’s largest auto market, has cut its car imports from Germany by nearly half in the past five years as its domestic automakers have become increasingly competitive. Chinese automakers dominate global production of electric and plug-in hybrid gasoline-electric vehicles, which now sell nearly as much in China as gasoline-powered cars.

But many of China’s wealthiest consumers remain fans of German brands. Mercedes sells more of its most luxurious car in China, the Maybach, which is built in Germany, than in the rest of the world combined.

Germany is crucial to China’s efforts to prevent new European tariffs from being finalized this fall, as was the case during the last major trade dispute between China and Europe.

European leaders who have pushed for tariffs on Chinese electric vehicles believe their own auto industry now faces a similarly dire threat.

To block the tariffs, Beijing would need to convince a majority of EU countries, representing at least 65% of the bloc’s population, to veto the European Commission’s decision.

Analysts say China is expected to target key countries in its response to European tariffs.

Potential tariffs on gasoline-powered cars would hit Germany, the most populous country in the European Union, which accounts for 19 percent of the bloc. Italy, which exports luxury gasoline-powered cars such as Ferrari and Lamborghini sports cars to China, ranks third.

France is Europe’s second-most populous country, and China’s potential tariffs on Cognac target one of France’s national symbols.

Spain, Europe’s fourth-most populous country, is the largest European pork exporter to China, a product Beijing has also threatened to impose tariffs on.

In addition to the 15 percent tariff, China imposes a 10 percent tax on buyers of gasoline-powered cars. Sedans and SUVs with large-displacement engines, which are mostly imported, are subject to an additional 40 percent tax.