Germany's Stance on EU Tariffs on Chinese EVs Remains Unclear

The chief economic adviser to German Chancellor Olaf Scholz revealed in an interview with Bloomberg TV that Germany is yet to make a decision on whether it will support the EU's proposal to impose tariffs on electric vehicles (EVs) imported from China. Earlier this year, the EU imposed provisional tariffs of up to 36% on EVs imported from China, in addition to the regular import duty of 10%. This decision was based on findings that China was providing substantial subsidies to its EV manufacturers. The EU member states are set to vote on Friday on whether to officially enforce these tariffs.

Concerns about Potential Trade War

Germany, being Europe's largest economy and leading automobile manufacturer, is apprehensive that the proposed tariffs could trigger a full-blown trade war with China, which could adversely affect its top carmakers. Germany has expressed its opposition to the EV tariffs on several occasions and has recently been joined by Spain in suggesting that the two major economies might abstain from the EU vote. Jorg Kukies, the chief economic adviser to Scholz, stated in the Bloomberg interview that Germany is still undecided on how it will vote on Friday.

Impact on German Carmakers

German carmakers have a significant market in China and are deeply integrated into the global supply chain. Therefore, Germany does not view tariffs as a beneficial strategy, according to Kukies. Kukies expressed a preference for a negotiated solution over the imposition of tariffs, regardless of how they are calibrated. The provisional duties, which have been in effect since July 5, are temporary and will last for a maximum of four months.

China's Response to the Tariffs

China has reacted to the tariffs by initiating anti-dumping investigations into EU imports, specifically targeting brandy and pork imports from the bloc. This move is likely aimed at Spain, France, the Netherlands, and Denmark. The VDA, Germany's automobile manufacturers' association, has stated that the anti-subsidy tariffs will not achieve the stated goal of ensuring fair competition conditions and protecting the domestic industry from unfair practices. The association further noted that the European anti-subsidy tariffs would not only affect Chinese manufacturers but also European companies and their joint ventures in particular.

Bottom Line

The decision to impose tariffs on Chinese EVs has sparked a complex debate within the EU, with Germany's stance remaining unclear. The potential for a trade war and its impact on German carmakers are significant factors influencing the decision. What are your thoughts on this issue? Share this article with your friends and discuss. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.