Germany trying to prevent or soften EU tariffs on China EVs

By: Kamil Kowalcze and Arne Delfs | Jun 14 2024 at 06:47 AM | International Trade

The German government is working to prevent the European Union’s new tariffs on Chinese electric vehicles from coming into force — or at least soften them should a full halt not be possible, according to people familiar with the matter.

Officials in Berlin are optimistic that the EU will be able to find a solution in direct talks with China, said one of the people, who spoke on the condition of anonymity because the talks are confidential.

Europe’s largest economy argued in the run-up to this week’s decision that there was still room for an agreement with the Chinese before the tariffs take effect on July 4. German officials see wiggle room and believe they have allies within the bloc, one of the people said, stressing that not only China, but also the EU will have to move for a deal.

“We still have a bit of time until July 4,” Wolfgang Büchner, a deputy German government spokesman, said Friday. “It would be very desirable if we could come to an amicable solution.”

Brussels decided on Wednesday to impose additional tariffs on electric cars shipped from China, taking levies to as much as 48% depending on the degree of cooperation companies displayed during the EU probe. This affects Chinese carmakers including BYD, Geely and MG owner SAIC. They were accused of distorting the market through state subsidies and violating WTO rules.

China has threatened retaliation across agriculture, aviation and cars with large engines, saying it’s deeply disappointed and firmly opposed to the measures on EVs. Any tit-for-tat measures may hurt German manufacturers including Volkswagen AG, Mercedes-Benz Group AG and BMW AG, which rely heavily on sales in the world’s biggest auto market.

German Economy Minister Robert Habeck said right after the decision that “there is now an opportunity to try and hopefully succeed in stopping” the threat of a spiraling tariff escalation.

Habeck will travel to China next week and plans to discuss the issue with government officials there. He already said at the end of April that a decision on tariffs against China shouldn’t be automatic but should ultimately be taken by politicians.

“The talks with China are being conducted by the European Commission, which also announced these talks,” the economy ministry said when contacted by Bloomberg. “As usual, the government is in close contact with the European Commission.”