Germany has launched an 11th-hour bid to avert a full-scale trade war between Europe and China, resisting French calls to hit Chinese electric vehicles with punitive duties.
The EU now charges a 10 percent tariff on all car imports — below China’s 15 percent.
Realizing that it won’t be able to avert the tariffs, Germany is now pushing to keep them as low as possible, ideally on a reciprocal level that China also imposes on the EU — meaning 15 percent.
“Something around 20-30 percent would give European manufacturers some breathing space to accelerate their investments in the sector and maintain their market share in Europe,” Elvire Fabry, senior research fellow at the Jacques Delors Institute in Paris, said.
Yet even the highest rumored duty — 25 percent — would not be enough to deter Chinese brands thanks to their huge cost and technology advantages.
Chinese EV sales into Europe grew by 23 percent, to nearly 120,000 units, in the first four months of this year.
“They can lower their prices and continue to be competitive.
We’ve seen that happen in France already,” Matthias Schmidt, a European auto analyst, said.
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The competitive advantage of China's manufacturing sector is structural. For Germany to be competitive again, they need to reduce inefficiencies brought about largely by the government (taxation, regulations, etc.)
Shanghai Tesla was able to complete a new factory (from groundbreaking to the 1st car rolling off the production line) in 12 months. And when they tried to copy that in Germany, it took them almost 3 years. Right now its Shanghai factory makes 1mm cars per year, while its Berlin factory is only making a fraction of that, and is hardly profitable.
@GrasshopperChuckForward2yrs2Y
Germany fears that China will retaliate against German cars in China which is reasonable given that Volkswagen sells 3 times as many cars in China as in Germany. CCP could ruin the German car industry which would be the end of Germany’s export economy.
Germany fell into a dependency trap.
China is the main deflationary force for consumers in the world today.
The god of industry and scale has gone to the other side of the trade war.
@BobcatFaithVeteran2yrs2Y
Don't ever count the hardy Germans out of anything involving hard work and innovation. They have perfected their training of their youth to be able to work in Germany's high tech manufacturing behemoth. Good on them and I would only hope that one day we too in the States would actually start training high schools boys that want to work in what used to be called manual jobs how to do those jobs really well.
@TruthfulRavenPatriot2yrs2Y
Germany has no choice but to turn to North America for increases in trade. The primary goal should be investment in Mexico and the US.
Investment in Mexico should cover the entire world, not just North America under the USMTA.
Investment in the US should be in energy-intensive industries, such as polyethylene, polypropylene, ammonia, urea and other petrochemical products, where $200 billion has been invested in the past 15 years. Germany can be a powerhouse in petrochemical exports from the US, not from Germany
@ISIDEWITH2yrs2Y
@ISIDEWITH2yrs2Y
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