In Germany, some of whose companies still make good profits in China and have the ear of the country’s politicians, the fear of a trade war prompted Chancellor Olaf Scholz to break ranks and openly question the EU’s electric vehicle subsidy probe.

Yet despite wide-ranging fears of the car tariffs in Berlin, the view among the majority of EU countries is that Brussels basically had no choice but to react to China’s massive subsidies across the entire EV supply chain, from raw material refining for batteries to finished cars.

“The Communist party last March … decided to increase industrial subsidies even more. They also decided not to stimulate domestic consumption and not to revalue the renminbi. If someone takes a decision like that, when there’s already so much capacity, it means: We want to flood you … it’s a declaration of a trade war,” said a third senior diplomat.

And the mood among the EU diplomats and officials that POLITICO spoke to was not one of Trumpian protectionist gloating about the decision to impose tariffs, but rather one of regret and alarm that this may well be a last resort — with European governments’ balance sheets so stretched they simply can’t match China’s subsidies.

Referring to the EU’s decision to impose anti-subsidy tariffs, Lee-Makiyama added: “It’s the Taylor Swift doctrine, where Brussels tells Beijing: ‘Look what you made me do.’”

Faced with massive pressure from Berlin to avoid a trade war, the joint venture plan to de-escalate the fight while securing some wins for Europe is quickly gaining traction in Brussels.

It may also be Europe’s last shot to play a bigger role in the EV supply chain.

Of course, political deals to secure big local investments are nothing new. “Every Asian carmaker had to invest in Europe in order to get tariff concessions. The Japanese built plants in France, Poland and Portugal. The South Koreans went into Central Europe. Also other Chinese firms like Huawei probably invested in France to gain partial access,” said ECIPE’s Lee-Makiyama.

What is new, however, is that the EU is not just using carrots such as subsidies and trade agreements, but also sticks such as the tariffs to encourage Chinese companies to invest on its soil.

Even more remarkable are discussions among officials and diplomats to use tools such as the investment screening regulation to cajole Chinese companies into such joint ventures.

“It’s for the Commission to come up with a proposal on that,” said the first senior diplomat when asked whether the EU would go as far as formally imposing local ownership requirements.