Germany is undecided on whether to support EU tariffs on Chinese electric vehicles

Germany has not yet decided whether it will support EU plans to formally impose tariffs on electric vehicles imported from China, German Chancellor Olaf Scholz’s economic adviser told Bloomberg TV on Tuesday.

Earlier this year, the EU imposed provisional tariffs of up to 36% on electric vehicles imported from China, on top of the usual 10% import tax. EU member states are due to vote on Friday on whether to formally impose the tariffs after finding that China has heavily subsidized electric vehicle manufacturers.

But Germany, Europe’s biggest economy and biggest carmaker, fears the tariffs could trigger an all-out trade war with China, with its top carmakers suffering the consequences.

Germany has repeatedly spoken out against tariffs on electric vehicles and was recently joined by Spain in suggesting the two biggest economies will abstain from the EU vote.

Germany has not yet decided how it will vote on Friday, Scholz’s chief economic adviser, Jorg Kukies, told Bloomberg.

German carmakers have a large market in China, and because they are integrated into the global supply chain, Germany doesn’t think tariffs are a good idea, Kukies said.

“A negotiated solution would certainly be preferable to the imposition of tariffs, no matter how calibrated they are,” the adviser told Bloomberg.

The current fees, effective from July 5, are provisional and for a maximum period of four months.

The tariffs have led to a backlash in China, which is continuing anti-dumping investigations into EU imports targeting brandy and pork imports from the bloc, likely targeting Spain, France, the Netherlands and Denmark.

The VDA, Germany’s car manufacturers’ association, said the “declared objective of ensuring conditions of fair competition and protecting the domestic industry from unfair practices will not be achieved” by the anti-subsidy tariffs.

“European anti-subsidy tariffs would not only affect Chinese producers, but also European companies and especially their joint ventures,” the VDA added.

By Tsvetana Paraskova for Oilprice.com

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