European car manufacturers, including those from Germany, are concerned about potential counter-tariffs from China that could impact their exports to the country. The German automotive industry’s advocacy group, VDA, is calling on the European Commission to exempt tariffs on Chinese electric cars to avoid harming European and US manufacturers who export to China.
China has previously imposed punitive tariffs on electric cars from the EU, with rates ranging from 17-38 percent. However, negotiations are ongoing, and there is a fear of retaliation from China with counter-tariffs, which could particularly affect the German car industry due to its significant exports to China. The urgency of the situation led to a last-minute plea from the advocacy organization to influence negotiations between China and the EU before the implementation of customs duties.
Trade with China is vital for German automakers, with about 30 percent of sales coming from China. Germany is a major exporter of at least 2.5-liter combustion engine cars this year, highlighting the importance of the Chinese market for the German automotive industry. There have been calls from Chinese car manufacturers to increase customs duties on European gasoline cars in response to the tariffs imposed by the EU.
The advocacy organization emphasizes the need for securing the supply of critical raw materials for the European electric car industry, reducing market access barriers, and creating transparency in trade policy instead of imposing tariffs. The impact of these tariffs on consumer prices in countries like Finland remains uncertain, but additional costs are a possibility. The issue of customs duties has received mixed responses in different European countries, with support in France and opposition in Germany, Sweden, and Hungary.
The VDA’s call for exemptions on tariffs highlights concerns that such measures could harm not only German car manufacturers but also other European and US companies that heavily export to China. The Commission accuses China of providing unfair support to local electric car manufacturers while denying these allegations.
If implemented correctly, customs duties can be an effective tool for protecting domestic industries while promoting fair trade practices worldwide. However, if used carelessly or without proper justification, they can have negative consequences for both consumers and businesses alike.
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