The European Union has threatened to hike tariffs on Chinese electric vehicles, escalating a trade dispute over Beijing’s subsidies for the exports that Brussels worries is hurting domestic carmakers.

The European Commission, the EU’s executive arm, said it would impose provisional tariffs that would result in Chinese carmakers facing additional duties of as much as 38%, up from the current level of 10%.

The commission said it reached out to Chinese authorities to discuss the findings of its investigation into the subsidies and “explore possible ways to resolve the issues”.

“Should discussions with Chinese authorities not lead to an effective solution,” the new rates would take effect on a provisional basis by July 4, the commission said in a press release.

Electric cars are the latest flash point in a broader trade dispute over what Brussels says is China’s unfair state support for green tech exports that also include solar panels, batteries and wind turbines.

Imports of Chinese-made EVs to the European Union have skyrocketed in recent years. They include vehicles from Western brands that have auto plants in China, including Tesla and BMW.

But EU officials complain that Chinese carmakers like BYD and SAIC are increasing market share and undercutting European car brands on price thanks to Beijing’s massive subsidies.