Germany's car industry warns urgently against punitive tariffs on Chinese cars
The Commission recently announced increased customs tariffs for electric cars produced in China. The background is accusations that Chinese manufacturers are benefiting from comprehensive subsidies at the expense of European manufacturers. The tariffs could take effect as early as Thursday, but negotiations with Chinese authorities and companies are still ongoing.
The ongoing talks were also welcomed by the VDA, which at the same time called for their expansion and the abandonment of the announced measures. The tariffs would not only affect Chinese producers but also European companies and joint ventures that produce in China - in some cases even more than Chinese producers.
The surcharge on the existing customs duty of ten percent is expected to amount to 17.4 percent for the Chinese manufacturer BYD, 20 percent for Geely, and 38.1 percent for SAIC, according to EU plans. Companies such as BMW or Tesla must calculate an average increase of 21 percent in weighted terms when exporting from China to the EU. However, manufacturers can apply for individual changes in Brussels in the coming months.
The VDA sees things differently than the EU Commission regarding a flooding of the automotive market by Chinese electric cars. Analyses indicated that the market share of Chinese brands in the overall European passenger car market would remain in the range of five to ten percent. In 2023, German manufacturers were expected to have sold approximately ten times as many electric cars in China as Chinese brands in Germany.
The VDA assumes that the introduction of higher tariffs will lead to a reaction from Beijing. This "carries the real risk of an escalation of the trade conflict with China." Shortly after the EU investigation was announced, the Chinese government initiated an anti-dumping procedure against French brandy. An investigation against European pork is also ongoing. "The examples show how quickly the conflict spreads to other sectors and can cause uncalculable damage," warned the automotive association.
A spiral of mutual measures could result in a situation where both sides suffer economic damage. Open markets are important for the European market because European manufacturers are heavily dependent on raw materials from China. "The anti-subsidy tariffs would increase the price of electric vehicles on the European market or prevent them from coming onto the market at all," explained the automotive association.
- The EU Commission has announced increased customs tariffs for Electric cars produced in Germany, specifically China, due to alleged subsidy benefits.
- Despite ongoing negotiations with Chinese authorities and companies, these tariffs could enter into force as early as Thursday.
- The Association of the Automotive Industry in Germany (VDA) has welcomed the talks but urged for their expansion and the abandonment of the proposed measures.
- The tariffs could impact not only Chinese manufacturers like BYD, Geely, and SAIC but also European companies and joint ventures operating in China.
- If the tariffs are implemented, German manufacturers like BMW and Tesla could face an average increase of 21% in weighted terms when exporting to Europe.
- The VDA predicts that Chinese brands will only maintain a market share of 5-10% in the overall European passenger car market.
- The VDA fears that the imposition of higher tariffs could lead to a trade conflict escalation with China, potentially impacting other sectors and causing significant economic damage.
