Global Economy News

The reaction of German car manufacturers to the action of the European Union against China

According to Tasnim news agency, quoted by Euronews, some prominent German car manufacturers such as Volkswagen and BMW have warned about the adverse effect of the new tariffs of the European Union on the competitiveness of the European Union's automotive industry as well as their activities in China.

Germany's Volkswagen has condemned European Union plans to impose import tariffs of up to 38 percent on Chinese electric cars, stressing that the tariffs will also have adverse effects on the European auto industry.

Volkswagen emphasized in a statement that this decision of the European Union will weaken the competition of European car manufacturers in the long run.

The European Union announced the increase in tariffs in June due to concerns about the Chinese government's subsidies for electric cars made in the country, which allow manufacturers of these cars to sell their products at much lower prices than European automakers.

The decision is based on a 9-month EU investigation into Chinese government subsidies.

However, European automakers, particularly in Germany, such as BMW and Volkswagen, have now reacted with concerns that they may face retaliatory tariffs from China on their extensive operations in China.

Currently, Western automakers in China, such as Tesla, Audi, BMW and Mercedes-Benz, enjoy advantages such as low tax rates, grants, easier access to capital, lower land costs and competitive prices for lithium batteries.

If these advantages are lost if the EU-China trade war escalates, it may force these European companies to change their overall business models, especially if they are forced to look elsewhere for alternative manufacturing plants.

This could be a significant blow to European electric vehicle manufacturers; Manufacturers who are currently seeing a decline in demand in their own country due to higher prices and the attractiveness of China's cheaper electric cars.

The European Union imposed a steep tariff hike on July 5 to stem the flood of cheap Chinese electric cars and protect its manufacturers.

Temporary additional tariffs of up to 38% will apply from July 5 for a maximum period of four months, according to a press release from the European Commission published on Thursday.

The decision comes nine months after European Commission President Ursula von der Leyen announced an investigation into a flood of cheap Chinese cars entering the bloc.

Based on the investigation, the European Commission concluded that China's all-electric vehicles benefit from an “unfair subsidy”, which poses a “threat of economic injury” to EU carmakers.

The definitive and final decision on these tariffs is expected to be announced by November, while negotiations between Brussels and Beijing will continue to resolve this issue.

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Mhd Narayan

Bringing over 8 years of expertise in digital marketing, I serve as a news editor dedicated to delivering compelling and informative content. As a seasoned content creator, my goal is to produce engaging news articles that resonate with diverse audiences.

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