Tariffs on Chinese EVs Could Harm German Carmakers: Potential Trade War Impact Revealed

BERLIN, Germany – Amidst the escalating trade tensions between the European Union and China, the prospect of tariffs on Chinese electric vehicles has raised concerns for German carmakers. The European Union is expected to announce new tariffs on imported Chinese electric vehicles, potentially as early as July, following an anti-subsidy investigation that uncovered unfair practices by China in the electric vehicle market.

Chinese electric vehicle manufacturers currently enjoy a significant price advantage of up to 50% over European counterparts, due to their more competitive cost structures. Experts suggest that EU tariffs of 30% to 40% may be necessary to level the playing field. However, imposing higher tariffs could provoke retaliatory measures from China, particularly targeting German carmakers such as Volkswagen, Mercedes, and BMW.

German carmakers, including Volkswagen, Mercedes, and BMW, export premium vehicles to China, representing a substantial portion of their automotive earnings. While these companies have joint ventures in China for local production, a significant portion of their profits comes from exporting premium vehicles to China. Any tariffs imposed by China could jeopardize these profits.

On the other hand, European mass-market carmakers like Renault and Stellantis, with minimal exposure to the Chinese market, may actually benefit from EU tariffs on Chinese imports. While Chinese retaliation could impact European and U.S. consumers by impeding access to cheaper electric vehicles, it could also delay the broader adoption of electric vehicles in these markets due to affordability concerns relative to traditional combustion-engine cars.

In a potential trade war targeting Chinese carmakers, both western original equipment manufacturers and consumers would face winners and losers. The repercussions of such a conflict could have far-reaching implications for the automotive industry and the wider adoption of electric vehicles. As discussions continue between the EU and China, the outcome of this trade dispute remains uncertain, with implications for various stakeholders in the global automotive market.