German car industry speaks out against EU punitive tariffs
Published: Wednesday, Oct 2nd 2024, 17:20
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Electric cars from China are much cheaper than models from the EU. The EU Commission accuses Beijing of distorting the market. Nevertheless, the industry is warning against additional tariffs - and the Chancellor also has concerns.
In the dispute over the EU's punitive tariffs on electric cars from China, the automotive industry is putting pressure on the German government and demanding resistance from Berlin. In the traffic light coalition, the FDP-led ministries of finance and transport are pushing for a German "no" in Brussels. Chancellor Olaf Scholz (SPD) has also expressed criticism of possible punitive tariffs. A decisive vote in Brussels is scheduled for Friday. It remains to be seen how the German government will react.
The EU Commission accuses China of heavily subsidizing the entire value chain for electric cars and thus distorting the market. The authority therefore wants to introduce additional tariffs, which in some cases are expected to amount to more than 35%.
However, the 27 EU member states have a say in the decision. Possible German positions include a no vote and an abstention. According to the EU Commission, Chinese electric cars are normally around 20 percent cheaper than models manufactured in the EU.
Car industry warns of global trade conflict
"A vote by the EU states to impose high additional tariffs on e-cars from China from the end of October would be a further step away from global cooperation," the President of the German Association of the Automotive Industry, Hildegard Müller, told the German Press Agency. "This measure would further increase the risk of a global trade conflict." Müller called for the German government to take a clear stance against the punitive tariffs. Abstention was not an option.
BMW boss Oliver Zipse also called for the German government to vote against the punitive tariffs. Prosperity in Germany depends on open markets and free trade, he said. Additional tariffs would harm globally active German companies and could "provoke a trade conflict that ultimately only knows losers."
Similar tones came from Stuttgart and Wolfsburg: Mercedes boss Ola Källenius called on the EU to seek a negotiated solution with China instead of imposing tariffs. "A 'no' from the German government on Friday would be a signal for such a negotiated solution instead of a trade conflict". VW is also urging the German government in Brussels to say no. A spokesperson said on request: "The planned tariffs are the wrong approach, they will not improve the competitiveness of the European automotive industry."
Chancellor relies on negotiations with China
Chancellor Scholz also expressed his concerns. "Of course we have to protect our economy from unfair trade practices," the SPD politician emphasized in Berlin. It is about a level playing field. "However, our reaction as the EU must not lead to us damaging ourselves. That is why the negotiations with China on electric vehicles must continue."
Federal Economics Minister Robert Habeck (Greens) also spoke out in favor of a political solution. He "agrees with everyone who says that tariffs are not the solution", emphasized the Green politician at the Berlin Global Dialogue. According to the Minister of Economic Affairs, China has made a proposal for a political solution to the conflict. "Now I am asking the EU to be open to this discussion."
Federal Finance Minister Christian Lindner (FDP) also expressed similar sentiments. "Germany cannot agree to a potential trade war with the People's Republic of China in a key sector," he emphasized.
The topic is also likely to have played a role in a meeting between Scholz and French President Emmanuel Macron. In the past, Macron had generally spoken positively about punitive measures against China's e-cars. Scholz went on to say that action should be taken where cheap Chinese imports were actually harming the economy, for example in the case of steel. The World Trade Organization and its principles should be respected more again.
Transport Minister Volker Wissing warned against "market barriers". These were not a suitable instrument for strengthening the competitiveness of the German or European automotive industry, the FDP politician told dpa. "The future viability of the automotive industry will be measured by whether electric cars can be offered at a competitive price."
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