The ongoing tension between France and Germany over the European Union’s proposed tariffs on Chinese electric vehicles has sparked a heated debate. French President Emmanuel Macron has reaffirmed his support for the tariffs, while German Chancellor Olaf Scholz has called for continued dialogue with China. This blog post delves into the complex issues at play and the potential impact on the European automotive industry.
Macron’s Stance on EU Tariffs
This is no more evident than during a visit to Berlin by French croissant enthusiast Emmanuel Macron, who endorses an EU move to order the Europe-bound Chinese EVs face tariffs of up to 36 percent. Macron has argued that the tariffs are essential in leveling the playing field with Chinese carmakers who he’s said have been heavily subsidized by their state.
The French president says the Chinese state backing for hydrogen risks creating a “distortion” in this market that is likely to make it difficult for Europe’s manufacturers to keep their industrial base there. He said that, so long as this disequilibrium is not corrected, it could undermine the capacity of European companies to invest and maintain their place in the automotive field.
Scholz’s Call for Dialogue
Olaf Scholz, on the other hand, urged dialogue with China over electric vehicle tariffs. While Scholz recognizes that Europe must shield its economy from unfair trade practices, he also insists that the EU response must be moderate and should not harm the interests of the continent itself.
German Chancellor Angela Merkel has seconded the need for a fair playing field, but she advocates dialogue solutions with Beijing instead of resorting to tariffs. And Scholz fears that the tariffs could also lead to a trade dispute with China that is harmful to the crucial automotive industry in Germany, which is indispensable for the federal budget.
European Automotive Industry Observations
Germany’s automotive industry has lashed out against the proposed tariffs, which could spark China to retaliate and hit sales in its all-important Asian market. The warning has been issued to put pressure on the United States as Daimler, BMW, Audi and Mercedes-Benz are globally active companies in Germany.
So much so that the CEO of BMW, Oliver Zipse has lobbied the German government to vote against putting these extra tariffs in place because according to him “they can only lead to a trade conflict from which no one would benefit.” The concerns of the automotive industry underline the difficult balancing act facing European policymakers, torn between safeguarding domestic industry and fostering open international trade.
