The European Union’s decision to impose high tariffs on Chinese electric vehicles has sparked a backlash from Germany’s powerful automotive industry, which has warned that the move risks igniting a trade conflict and harming European consumers.
The European Commission’s proposal to impose definitive countervailing duties on imports of battery electric vehicles (BEVs) from China secured the necessary support from EU member states on Friday. However, Germany, along with four other countries, voted against the measure, highlighting a significant rift within the bloc.
Hildegard Müller, president of the German Association of the Automotive Industry (VDA), led the charge against the tariffs, which could be as high as 45.3 per cent from the end of October. “The vote not to reject the EU Commission’s plan is a further step away from global cooperation,” she said. “A trade conflict would be a loss for all stakeholders.”
Germany’s automotive industry, a cornerstone of its economy, has been a vocal opponent of the tariffs. Müller argued that while there was a need for negotiations with China to address state support for its electric vehicle sector, the potential damage from countervailing tariffs outweighed the possible benefits.
“The intended tariffs not only increase the risk of a mutual trade conflict but would also make vehicles significantly more expensive for consumers,” Müller said. “Increasing market isolation is not an option for the European—and especially the German—automotive industry.”
The European Commission’s anti-subsidy investigation found that Chinese subsidies were giving an unfair advantage to Chinese electric car manufacturers. However, the VDA has criticised the investigation’s outcome, which it said would burden German and European manufacturers exporting from China to the EU with higher duties than their competitors from China and the US.
“The result of the investigation is also not convincing with regard to the announced countervailing duties,” Müller said. “German and European manufacturers who export from China to the EU are burdened with higher duties than individual competitors from China and the USA. This is also simply incomprehensible and not very effective.”
Germany’s opposition to the tariffs comes as the EU seeks to assert its trade prowess and protect its industries from what it sees as unfair competition. However, the German industry’s stance underscores the delicate balance the EU must strike between protecting its industries and avoiding a tit-for-tat trade war with China.
The decision was not unanimous, with Germany, Hungary, Malta, Slovenia, and Slovakia voting against, representing 22.65 per cent of the EU population. Ten countries voted in favour, while twelve abstained.
With the European-Chinese negotiations now entering a critical phase, the German government is expected to play a strong role in pushing for a successful outcome. Müller urged all sides to approach the negotiations with strength and determination to avert additional tariffs through a jointly found solution.
“We strongly appeal to make the European-Chinese negotiations a success in this sense,” Müller said. “The German government must play a strong role in this.”
