German Chamber in China says EU tariffs won’t protect automakers

The German business chamber said the European Union should invest to become more competitive instead of hiking tariffs on China-made electric vehicles, adding to Berlin’s efforts to avert or soften the trade curbs. 

The call comes as Brussels decided to impose additional tariffs on EVs shipped from China, taking levies to as much as 48%. This affects Chinese carmakers including BYD Co., Geely Automobile Holdings Ltd. and SAIC Motor Corp., who were accused of distorting the market through state subsidies. 

“Tariffs as suggested now by the EU will not increase the competitiveness of the automotive industry,” said Maximilian Butek, executive director of the German Chamber of Commerce in East China. 

“You cannot protect the automotive industry only in the European Union if they are all over the world,” he said at a press launch for the chamber’s business confidence survey.

The German government is working to prevent the EU’s new tariffs on Chinese EVs from coming into force — or at least soften them if a full halt isn’t possible. Beijing has threatened retaliation across agriculture, aviation and cars with large engines. Any tit-for-tat measures may hurt German manufacturers including Volkswagen AG, Mercedes-Benz Group AG and BMW AG, which rely heavily on sales in the world’s biggest auto market. 

Butek said German companies had not complained about Chinese subsidies in the EV sector prior to the EU investigation. The top challenge for them is price pressure, according to the chamber’s survey conducted late May. This is a result of overcapacity, Butek said. 

“But our companies are quite aligned on that — that they only can survive those times when they become more competitive,” he added.

Three quarters of German firms in China reported overcapacities in their industries, with 20% saying it’s substantial, the survey found. Most saw overcapacity as a recent phenomenon. About half said they started seeing overcapacity last year and 35% said it happened in the last five years.

The survey also found that German companies have a slightly more positive outlook on China compared with last year, though fewer firms planned to increase their investment in the short term. 

About 38% of respondents expected a worsening outlook for their industries this year compared with a year ago, a decrease from 52% when firms were asked the same question in September. Slightly more than half are planning to boost investment over the next two years, down from 61% last year.