Reluctant Germany likely to be outvoted in EU regarding tariffs on Chinese EVs – media

In the looming trade conflict with China over import tariffs on electric vehicles, Germany is at risk of seeing its rejection of trade restrictions being outvoted in the EU, the Süddeutsche Zeitung reported. The European Commission last year started a probe into possible price dumping by Chinese carmakers due to illicit state support that could lead to an increase of the existing 10-percent tariff on EVs made in China. Over the past months, chancellor Olaf Scholz often signaled that he is opposed to hiking the tariffs. There are concerns over Germany’s and Europe’s reliance on raw material imports from China and the strong presence of German carmakers on the Chinese market that could be affected by retaliatory measures from Beijing. However, economy minister Robert Habeck recently said: “I expect it will come to this,” adding that he believes such a step could help to create fairer competition with the Asian manufacturing heavyweight. According to the newspaper, Germany could do little against EU tariffs on Chinese imports if a majority of EU members want them. Trade policy in the EU mostly falls within the remit of the Commission, whose head Ursula von der Leyen has stressed that she is in favour of hiking tariffs if they improve competition. A qualified majority would then have to back the decision for it to go through - and the German government currently has little hope of being able to block such a vote, the article said.  

While some countries like Sweden share Germany’s aversion to trade restrictions, the EU investigation is likely to recommend them in response to Chinese state aid practices, the article said. At the same time, a recent decision by the US government to increase tariffs on Chinese EVs from 25 to 100 percent is likely to add further pressure on Europe to safeguard domestic producers. French president Emmanuel Macron is among those who support protective EU tariffs. A decision on the EU probe is due by July but the result could be decided several weeks earlier, the newspaper said. Meanwhile, China’s Chamber of Commerce to the EU signaled that the government in Beijing might impose tariffs of up to 25 percent on imports of large combustion engine cars, business news agency Bloomberg reported. The news led to a slide in share prices of Germany’s premium carmakers BMW and Mercedes, who make most of their profits through luxury vehicles with large engines and maintain a heavy presence as well as sizeable manufacturing capacities in China.