The Association of the Automotive Industry (VDA) criticizes the EU Commission’s threat to impose high punitive tariffs on electric cars in the future China to raise. Association President Hildegard Müller (56) sees the taxes as an obstacle to global cooperation. This increases the risk of global trade conflicts, she emphasized. “It is also a fact: countervailing duties for electric cars imported from China are not suitable for strengthening the competitiveness of the European automotive industry,” she said on Wednesday. The German Chamber of Commerce and Industry (DIHK) also warned that the move could lead to greater trade conflicts.
German car manufacturers had already expressed their rejection of the tariff plans in the run-up to the Brussels decision. Top managers of BMW, Mercedes and Volkswagen warned against imposing import duties on vehicles from China. According to HSBC estimates, German car manufacturers generate 20 to 23 percent of their global profits in the world’s second largest economy and now fear retaliation from Beijing. In addition, a large proportion of the cars imported into the EU from China come from European manufacturers.
Europe’s largest carmaker Volkswagen reiterated the criticism on Wednesday. “Countervailing duties are generally not suitable for strengthening the competitiveness of the European automotive industry in the long term – we reject them,” said a company spokesman for the German Press Agency. “The negative impact of this decision outweighs any benefits for the European and especially the German automotive industry.”
The EU Commission announced its decision on punitive tariffs on electric cars on Wednesday. According to the information, whether the tariffs of up to 38.1 percent actually have to be paid depends on whether another solution can be found with China. They would then be withheld retroactively from the beginning of July if the EU agreed to impose higher tariffs in the long term.
The Chinese government is called upon to signal its willingness to talk. “It is also up to China to approach Europe with constructive proposals and to stop behavior that distorts competition consistently and quickly in order to avoid an expansion of trade conflicts,” said Müller. China is also needed to successfully overcome the climate crisis.
Bosch boss: “I am against tariff-based policies”
Enlarge image
Business in China: Bosch boss Stefan Hartung criticizes the EU’s new tariffs
Photo: Hannes P Albert / dpa
Criticism of the planned tariffs also came from the world’s largest auto supplier Bosch. “I am against tariff-based policies – that can lead to a chain reaction,” said Bosch boss Stefan Hartung (58) on Tuesday evening at the International Club of Frankfurt Business Journalists (ICFW) in Frankfurt. Higher import tariffs could slow down economic growth and increase inflation, which would affect large parts of the population. It would also be very damaging to the global economy if companies split between markets because of the trade conflict USA and China would have to decide.
China is an important market for Bosch. With 17 billion euros, the Swabians recently achieved almost a fifth of their annual sales there. The majority of this comes from car suppliers – the world market leader’s technology is in many cars from China. Hartung emphasized that Chinese manufacturers are just as important to him as customers as Western ones. “I like all customers.”
Criticism also comes from BMW CEO Oliver Zipse (60). That’s the wrong way. The EU Commission is thereby harming European companies and European interests,” said Zipse on Wednesday. Protectionism could set a spiral in motion; tariffs lead to new tariffs and isolation. “From the BMW Group’s perspective, protectionist measures such as the introduction of import tariffs do not help it compete in international markets.”
Federal Transport Minister Volker Wissing (54, FDP) warned of a trade war following the announcement of higher tariffs on electric cars from China. “Vehicles must become cheaper through more competition, open markets and significantly better location conditions in the EU, not through trade wars and market isolation,” wrote Wissing on Wednesday in the short message service X. “Punitive tariffs from the EU Commission are hitting German companies and their top products.”
Fighting sounds from China
As expected, there are also critical tones from the Chinese side about the EU’s tariff announcement. China’s Ministry of Commerce has sharply criticized the EU’s threat of punitive tariffs on electric cars from the People’s Republic and suggested countermeasures. Beijing will closely monitor the European side’s further process and resolutely take all necessary measures to protect the rights and interests of Chinese companies, a spokesman for the authority said on Wednesday. China is very concerned and dissatisfied with the EU’s behavior and Chinese industry is disappointed.
The Chinese Chamber of Foreign Trade in the EU (CCCEU) said it was “shocked” and “seriously disappointed”. The EU Commission is relying on protectionist trade policy.
According to an industry association, Chinese car manufacturers are sticking to their plans for their European business despite the threat of anti-dumping tariffs. “Chinese companies will continue to steadfastly advance their business in Europe and integrate into local markets,” said Cui Dongshu, secretary general of the Chinese automobile association CPCA on Tuesday. The automotive industry plays an important role in the European labor market. “Chinese companies will not take aggressive steps to jeopardize labor market stability in Europe.”
Critical words from economists
Economists make a nuanced assessment of the tariff decision. “The punitive tariffs decided by the European Union on imports of electric cars from China are necessary to defend the principles of a fair market economy and to protect European business locations,” said DIW President Marcel Fratzscher (53). “The move represents a compromise – particularly between the German and French positions, with the German automotive industry expressing significant concerns about possible countermeasures from China.”
According to Vincent Stamer from the Commerzbank The measures will also affect German car manufacturers economically. Because they produced electric cars in China and imported them back to Europe. “This will hardly be profitable in the future without significant price increases,” said Stamer. On the other hand, according to a study, Chinese exporters have such high profit margins that they can compensate for additional tariffs of up to 30 percent and continue to export their cars to Europe at a profit, according to the expert.
more on the subject
IfW President Moritz Schularick (49) also expects that the introduction of tariffs will have noticeable effects. Current calculations by IfW Kiel show that EU tariffs of around 31 percent on Chinese electric cars could lead to a decline in electric car imports from China of around 25 percent. This corresponds to a value of around four billion US dollars.
A recent study by the IfW Kiel has calculated the extent of Chinese industrial subsidies, which currently amount to over 200 billion euros per year. These subsidies distort competition and can, in principle, justify countermeasures by the EU. The latest decision shows the European Union’s determination to ensure a level playing field in the European market.
“The EU should refrain from imposing tariffs on Chinese electric cars,” says Ifo boss Clemens Fuest (55). “There are two disadvantages.” Firstly, China is an important sales market for European cars. Punitive tariffs from the EU would trigger Chinese countermeasures; a trade war would serve no one. Secondly, cheap electric cars from China make it easier to electrify car traffic and thus decarbonise the economy.”