Automotive industry warns urgently against trade war with China

The German Association of the Automotive Industry (VDA) is certain that tariffs against Chinese electric cars will not achieve the goal of ensuring fair competitive conditions and protecting the domestic industry from unfair practices. In a key issues paper presented today, the association states that the planned tariffs will prevent the ramp-up of electromobility and decarbonization and thus the achievement of the Paris CO2 climate targets. They are therefore not in the interests of the European Union, especially as they will harm both European consumers and European companies, explains the VDA.

Instead - the association demands - the European Commission should abandon the announced anti-subsidy tariffs and find a negotiated solution with China. Access to critical raw materials must also be secured in the long term and cross-sector market access barriers must be dismantled on both sides. European anti-subsidy tariffs would not only affect Chinese manufacturers, but also European companies and their joint ventures in China in particular. This is because a large proportion of vehicle imports from China to the EU are made by European and American manufacturers.

Germany has a significant surplus in automotive trade with China: 15.1 billion worth of passenger cars were exported from Germany to China in 2023. Imports of passenger cars had a value of €4.0 billion. Automotive suppliers exported parts worth €11.2 billion to China in 2023, while parts worth €2.8 billion were imported from China. China is therefore the largest export market for exports from suppliers producing in Germany.

The introduction of anti-subsidy tariffs will lead to countermeasures and retaliatory measures and harbors the real risk of an escalation of the trade conflict with China. A negative spiral of trade conflicts would result in a lose-lose situation in which both sides suffer economic damage without a constructive solution being reached on the merits. The association is not alone in this opinion. Chinese countermeasures could severely affect the export-oriented sectors of the European economy. The impending increase in import duties on vehicles with engines with a displacement of over 2.5 liters would hit European automotive production hard.

In 2023, German manufacturers exported 216,299 cars from Germany to China, around a third of which were vehicles with an engine capacity of over 2.5 liters. In addition, German manufacturers alone exported around 48,000 cars with an engine capacity of over 2.5 liters from EU production sites outside Germany (Slovakia, Austria, Italy) in 2023.

Forecasts indicate that no excessive market penetration of Chinese battery electric vehicles is to be expected in the medium to long term. Analyses by S&P ("AutoInsight") for the year 2030 currently assume that the market share of Chinese manufacturers in the overall passenger car market in Europe will stabilize in the range of five to ten percent. (aum)