For months, the German car industry has been warning against imposing import tariffs to make it harder for Chinese manufacturers to access Europe. In vain. The tariffs will come into force on Friday. From the EU Commission’s point of view, this is a step to create a level playing field in the fight against highly subsidized companies from the Far East.
Fears of countermeasures are now spreading at the company headquarters in Wolfsburg, Munich and Stuttgart. “Compensatory tariffs are generally not suitable for strengthening the competitiveness of the European automotive industry in the long term,” says Volkswagen. “We reject them.” Mercedes boss Ola Källenius is calling for restrictions on world trade to be reduced instead of new ones being created. “What we do not need, as an export nation, are increasing trade barriers.” BMW boss Oliver Zipse is also among the critics and warns of a trade war with China. “This runs the risk that the trading partner will respond with countermeasures. Perhaps the availability of essential raw materials for electric vehicles will then suddenly become more difficult,” he warned in the FAZ six weeks ago.
BMW with further arguments
On Thursday, Zipse added in a statement from the group: “The introduction of additional import tariffs leads to a dead end. It does not strengthen the competitiveness of European manufacturers. On the contrary: it damages the business model of globally operating companies, restricts the supply of electric cars for European customers and can thus even slow down decarbonization in the transport sector. Such measures are a serious interference with the principle of free trade, which is also propagated by the EU.”
BMW would be directly affected by the punitive tariffs, for example with its new electric version of the Mini Cooper, which the Bavarians have built by their Chinese partner Great Wall in Zhangjiagang. The regulation applies here which, from the industry’s point of view, has absurd features. Since the vehicle had not yet rolled off the production line at the time of the European anti-subsidy investigation, BMW is counted among the non-cooperating companies that did not adequately answer the questionnaire on Chinese state aid. The maximum rate of 37.6 percent would therefore apply to the electric Mini, the same amount as the Chinese VW partner SAIC has to pay. It mainly exports models of its MG brand from China to Europe and, according to the EU Commission, did not answer questions or did not answer them adequately. BYD, on the other hand, cooperated and is now subject to 17.4 percent in additional tariffs.
BMW fears that the new E-Mini will become virtually unsellable on the European market due to a high customs surcharge – or will have to be sold at a loss. VW is facing the same problem with its Cupra Tavascan electric car, which has only recently been produced in the Chinese province of Anhui and shipped from there to Europe. So far only a few models of the Spanish VW brand have been sold, but several thousand are reportedly already on their way to Europe on ships. In Wolfsburg, they hope that the EU Commission will react and adjust the rate for the Tavascan.
The danger of Chinese countermeasures is also more serious. The People’s Republic has already threatened import duties on vehicles with engines with a displacement of over 2.5 liters. This would affect German premium manufacturers in particular. The listed VW subsidiary Porsche is particularly at risk. Unlike Mercedes, BMW or Audi, it has no production of its own in China and has to export all models there. At the same time, there is fear of a shortage of important raw materials, including those for which there are large deposits outside China. Lithium, cobalt and nickel are often transported to the People’s Republic for further processing because there are no refineries elsewhere.
The industry expects that Beijing will not react immediately with the greatest severity, but will wait for further talks. The EU tariffs will initially apply for four months. “The showdown will come in November, when a vote is taken on whether to introduce the tariffs permanently for five years,” says an auto manager. The industry is still hoping for a settlement of the dispute. “We see the current willingness to talk on the part of the EU and China as a positive sign and are continuing to rely on political dialogue,” says Mercedes.
VW warns that the consequences of the conflict extend beyond the purchase prices of electric cars from China. “We will only be able to further strengthen the ramp-up of e-mobility in Europe through precise, targeted cooperation with China,” says Thomas Steg, the group’s chief lobbyist in Berlin. He points to the still high proportion of battery cells from China. Production in the European battery cell plants also depends on cooperation with Chinese partners who supply the equipment for the cell factories. He does not believe that the view of those responsible in Brussels will change and that the situation will ease again soon. “There are many signs that the anti-China sentiment will not subside any time soon,” he says. “The leitmotif in Brussels seems to be increasingly focused on resilience, strategic autonomy and decoupling.”
