On the brink of a full-scale trade war with the EU, China is panicking and offering deals to German carmakers in an attempt to bring things back from the brink.
The world’s second-largest economy proposed reducing the existing 15% tariff on large-engine cars imported from EU countries to persuade Germany to let the EU cancel the 38.1% tariff on Chinese electric vehicles announced last week. Burundi The report quoted people familiar with the matter.
Chinese Commerce Minister Wang Wentao proposed the deal during a meeting with his German counterpart Robert Habeck in Beijing over the weekend, according to a person familiar with the matter. Burundi. It’s unclear whether the incentive, which would greatly benefit German carmakers, will change the EU’s stance, but it could persuade Germany to use its influence as the bloc’s largest economy before tariffs are scheduled for July 4. Terms may be changed before taking effect.
China’s incentives contrast with the knee-jerk reaction to last week’s announcement of EU tariffs. China announced an anti-dumping investigation into pork imports from the EU after the EU voted to impose tariffs of up to 38.1% on Chinese-made cars produced by some of the country’s largest carmakers. Chinese customs data shows that last year, more than half of the pork imported by China, the world’s largest pork consumer, came from the EU. China has also threatened to increase tariffs on large-engine cars to as much as 25%, which would directly impact German carmakers.
Whether as an incentive or a threat, China is eager to remove EU tariffs. From January to April, 37% of China’s electric vehicles were exported to EU member states. Chinese automakers already face a 102.5% tariff imposed by President Joe Biden last month, and Canada said on Monday it was also considering imposing tariffs on Chinese electric vehicles.
The inducement of lower tariffs on imported cars from China is also attractive to German automakers. Sales to China accounted for about a third of Germany’s total car sales last year, but the once dominant German automakers are increasingly facing brutal pressure from Chinese auto companies.
Last year, Volkswagen was overtaken by domestic automaker BYD as China’s best-selling car brand. For cars above $34,500, German brands’ market share is expected to fall from 60% in 2020 to 45% in 2023. wall street journal The report cited Bernstein’s data.
Lower tariffs could help boost German automakers’ competition with Chinese rivals. The German Automobile Industry Association has issued a statement making it clear that the new tariffs will do more harm than good.
“The potential harm caused by the measures now announced may outweigh the potential benefits to the European (especially German) automotive industry,” the association said in a statement.
Despite the heated rhetoric between the EU and China, the two countries are still expected to avoid a full-blown trade war. Brussels and Beijing will begin negotiations on electric vehicle tariffs this week, according to a statement from the Chinese Ministry of Commerce.
In a weekend meeting with Germany’s Harbeck, Chinese Commerce Minister Wang Yi said China was open to negotiations but also warned it was not afraid of retaliation.
“If the EU is sincere, China hopes to start negotiations as soon as possible; if the EU is sincere, China hopes to start negotiations as soon as possible.” According to Chinese official media reports, Wang Yi said that if the EU insists on going its own way, China will take all necessary actions to defend its own interests.
