German political and business circles oppose EU’s tariff increase on Chinese electric vehicles

In a recent development, the European Commission has approved a resolution to impose tariffs on electric vehicles from China, aimed at offsetting what it perceives as an “unfair competitive advantage” that Chinese manufacturers gain through government subsidies. This move has sparked controversy within the European Union, particularly among political and business leaders in Germany, where many have voiced strong opposition, warning that the new tariffs could adversely affect the German auto industry and trade relations between the EU and China.

One of the prominent figures against this resolution is German Finance Minister Christian Lindner. He argues that the EU’s action could escalate tensions in trade with China and negatively impact economic development for both sides. Lindner has emphasized on several occasions that the EU should tread carefully and avoid igniting unnecessary conflicts through unilateral trade measures. He pointed out that Germany, as Europe’s largest car production nation, has close economic ties with China, and the electric vehicle tariffs could severely damage the global competitiveness of German automakers. He cautioned that engaging in a trade war with China would be more detrimental than beneficial to the development of crucial industries in Germany and across Europe.

Other German political figures share similar concerns, fearing that these tariffs will raise production costs for domestic car manufacturers and weaken the competitiveness of German automotive brands, particularly in the Chinese market. Federal Minister for Digital and Transport Volker Wissing commented that attempting to shield European industries by imposing taxes on Chinese electric vehicles is a “wrong approach.” He believes that genuine global competition will inspire German companies to produce higher-quality and more affordable vehicles, stating, “I am not worried that the German automotive industry will not survive this competition.” Germany’s Vice Chancellor and Economy Minister Robert Habeck also expressed in a media interview that imposing tariffs on Chinese electric vehicles would harm the German economy.

The German Association of the Automotive Industry and the Federation of German Industries have emerged as key organizations opposing the tariff resolution on behalf of the German industrial sector. Andreas Rade, CEO of the Automotive Industry Association, stated that issues between Europe and China should be resolved through dialogue rather than descending into unhealthy competition, which could not only lead to increased car prices in the EU but also severely impact the EU economy that heavily relies on exports. Rade emphasized, “What we need is exactly the opposite.” The association believes that in the medium to long term, Chinese electric vehicles will not “flood” the European market. Instead, enhancing the competitiveness of the European automotive industry should focus on boosting innovation and free trade, rather than depending on protectionist measures. They urge the European Commission to abandon temporary countervailing duties on Chinese electric vehicles and seek resolution through dialogue, fostering a commitment with China to ensure open markets, secure supply chains, and achieve environmental goals.

The automotive industry association in Baden-Württemberg has also raised concerns, warning that imposing punitive tariffs on Chinese electric vehicles could jeopardize the German auto industry. Chairman Michael Ziegler stressed that 40% of Volkswagen’s sales and over 30% of BMW and Daimler’s sales rely on the Chinese market. If China responds with countermeasures, it could undermine the commercial standing of German automotive companies. Ziegler stated, “As Europe’s largest automotive trading partner, China could take strong retaliatory actions that would hit us hard. They may increase prices on German or European auto parts. Without parts manufactured in China, we cannot produce cars in Germany; potential price increases would significantly affect production costs, and the risk of escalating trade conflicts could disrupt supply chains, directly impacting employees in Baden-Württemberg.” He underscored that the automotive industry should take all necessary steps to maintain competitiveness, including facing global competition and continuously enhancing innovation, such as establishing competitive battery production facilities in Europe; punitive tariffs would be counterproductive.

The Federation of German Industries reiterated that while the EU has the right to act to protect European industries, imposing tariffs on Chinese electric vehicles is not the optimal solution. A spokesperson for the organization highlighted the deep trade relationship between Germany and China, which involves substantial investment and supply chain collaboration. Although China’s economic model differs from that of the West, reliance on protectionist measures to undermine bilateral trade is not the answer. Instead, they advocate for continued negotiations to resolve potential trade disputes to avoid further damaging global supply chains.

Germany’s three major automotive manufacturers—Volkswagen, BMW, and Daimler—have also expressed unequivocal disapproval of the European Commission’s resolution, using terms like “totally unworkable,” “severely damaging,” “incorrect,” “far-reaching negative consequences,” and “adverse effects.” BMW Group Chairman Oliver Zipse warned that, on one hand, electric vehicle tariffs would invite retaliatory measures, making vital raw materials scarce; on the other hand, global operations give large automakers like BMW an industrial advantage, and imposing import tariffs could jeopardize this advantage. These three companies have invested heavily in the Chinese market over the years and rely on Chinese manufacturing and supply chains for production. Additional tariffs would not only raise import costs but could also diminish the competitiveness of German automakers in the Chinese market.

It is evident that there is a unified stance of opposition among Germany’s political and business leaders regarding the EU’s decision to impose tariffs on Chinese electric vehicles. Politicians are concerned that this measure could harm bilateral economic relations with China and potentially lead to trade friction, while industry representatives worry that tariffs would escalate production costs and weaken the global competitiveness of the German automotive sector, especially in the critical Chinese market. Many industry experts have warned that any trade tensions could yield negative consequences, urging German automakers to prepare for possible market risks. Observers believe that Germany’s political and business circles will continue to advocate for resolving this dispute through consultation and negotiation in order to protect their economic interests.