By David Sachs


The EU's planned tariffs on Chinese electric vehicles have sparked concern from the German car industry, which fears the move could escalate global trade tensions and harm business.

German carmakers Volkswagen, BMW and Mercedes-Benz have significant footprints in China, a country that the EU Commission said Wednesday is unfairly subsidizing local manufacturers to the detriment of European companies. The new import fees--which range from about 17% to 38%--will remediate harm to the EU car industry caused by the subsidies, the EU said.

Retaliation is a concern, said Verband der Automobilindustrie, an organization that represents Germany's car industry. Both market-distorting subsidies and tariffs undermine free trade and fan the flames of a trade war, the group, known as VDA, said.

"The potential damage that could be caused by the measures now announced may be greater than the potential benefits for the European--and in particular the German--automotive industry," said VDA President Hildegard Mueller.

Volkswagen Group said the tariffs will undermine competition in the long run and be detrimental to EV demand in Europe. The Audi and Porsche parent, which sells about a third of its cars in China, also exports cars from China to Europe and would be subject to the new duty. It rejected the need for tariffs despite facing fierce competition from local carmakers like BYD that are threatening its market share and pricing.

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

In light of the tariffs, Mercedes warned against a general trend towards protectionism and said it supports free trade on an even playing field. The company sold 737,000 cars in China last year, down 2% from 2022.

"Fair and, above all, free global trade is very important, drives innovation and growth," said Mercedes CEO Ola Kaellenius. "What we do not need, as an exporting nation, is rising trade barriers."

The EU has contacted Chinese authorities to discuss the tariffs and possible resolutions, it said. Germany's VDA called for China to engage with Europe on constructive proposals.

BMW did not immediately respond to a request for comment.


Write to David Sachs at david.sachs@wsj.com


(END) Dow Jones Newswires

06-12-24 0918ET