Punitive tariffs on electric cars from China
German car industry demands “the exact opposite”
15.06.2024, 19:58
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On Wednesday, the EU Commission announced punitive tariffs on electric cars produced in China due to antitrust violations. The German car industry fears major damage to the European economy. Other business associations see the situation more relaxed.
The German car industry hopes that the announced higher EU tariffs on electric cars from China can still be averted with a negotiated solution. “We are counting on the EU Commission and China to find a solution through dialogue,” said the managing director of the Association of the Automotive Industry (VDA), Andreas Rade, to “Wirtschaftswoche”. “We must not get caught up in a race to outdo each other, which will then also affect completely different markets.”
It’s not just about the car industry, Rade stressed. “That would cause enormous damage to the European economic area, which is strong in exports.” In addition, the tariffs would make electric cars more expensive overall. “What we need is exactly the opposite.”
On Wednesday, the EU Commission announced increased tariffs for electric cars produced in China. The background to this are allegations that Chinese manufacturers are benefiting from extensive subsidies and that this is to the detriment of European manufacturers. However, Brussels had granted Beijing a grace period, also at the urging of the German government: negotiations will first take place with Chinese authorities and companies, and the new tariffs will then be introduced at the beginning of July.
Praise from industry and research
The German car industry has a strong presence in China and fears negative consequences from EU punitive tariffs on Chinese cars. On the one hand, the Chinese authorities could respond with countermeasures, and on the other hand, cars produced by German manufacturers in China would also be affected by higher tariffs when imported into Europe. The German government therefore rejects the tariff increases.
In other economic sectors, including in Germany, the customs announcement from Brussels is viewed much less critically. The Federation of German Industries (BDI), for example, expressed understanding: China had committed a competition violation according to the current rules of the World Trade Organization (WTO). It was right that the EU Commission “also consistently uses its defensive instruments”.
Economist Moritz Schularick praised the Brussels announcement, saying it showed “the European Union’s determination to ensure fair competition conditions on the European market.” In view of the expected increase in the price of electric cars, it is important to find the right balance between fair competition and the promotion of green technologies, explained the President of the Kiel Institute for Economic Research. In addition, “it is crucial that Europe presents a united front on this issue and does not allow itself to be divided.”