Germany warns of ‘trade war’ over EU’s tariffs on China electric cars

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The EU’s threat to hit Chinese electric cars with additional tariffs following an anti-subsidy probe risks a “trade war”, Germany said Wednesday, as the country’s auto giants warned the move would backfire.

“The European Commission’s punitive tariffs hit German companies and their top products,” German Transport Minister Volker Wissing said on X, formerly Twitter.

“Cars must become cheaper through more competition, open markets and significantly better business conditions in the EU, not through trade war and market isolation.”

After launching an investigation last year, the EU Wednesday threatened to impose extra tariffs of up to 38 percent on Chinese electric car imports from next month, unless Brussels and Beijing can resolve the issue.

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China is an important market for Germany’s carmakers -- in particular Volkswagen, Europe’s largest auto manufacturer -- and industry figures have lined up to warn that new tariffs could trigger retaliatory measures.

Chancellor Olaf Scholz himself in May noted that half of EVs imported from China were produced by Western manufacturers.

After the announcement, Volkswagen said it rejected the imposition of the duties.

“The negative effects of this decision outweigh any potential benefits for the European and especially the German automotive industry,” a Volkswagen spokesman said in a statement.

Germany’s VDA auto industry association said it was in favour of “free and fair trade”.

The tariffs “will not solve the challenges” facing the industry, VDA president Hildegard Mueller said, instead calling for efforts to make Europe more attractive as a place for manufacturers.

Mercedes-Benz CEO Ola Kallenius added his voice to the concerns, saying that “what we do not need, as an exporting nation, is rising trade barriers.

“The dismantling of restrictions and expansion of fair and free trade has led to economic growth. So we shouldn’t go in the other direction now.”

German government spokesman Steffen Hebestreit meanwhile welcomed the fact that the European Commission had held out the prospect of resolving the dispute through talks before the tariffs provisionally come into force on July 4.

It “would be very desirable from our point of view if we can come to an amicable solution,” he told a regular press conference in Berlin.

“We do not need further trade barriers but we must facilitate world trade. At the same time it must also remain.. fair.”

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