Germany, Sweden lukewarm on tariffs on Chinese electric cars

STOCKHOLM, Sweden — The leaders of Germany and Sweden expressed reservations Tuesday about possible European tariffs on Chinese electric vehicles after Washington announced huge duties on Chinese EVs.

Swedish Prime Minister Ulf Kristersson and German Chancellor Olaf Scholz were asked at a press conference in Stockholm whether they support the EU following the United States in slapping tariffs on Chinese electric cars.

“As far as tariffs are concerned, we are in agreement that it is a bad idea to dismantle global trade,” Kristersson told reporters on the second day of Scholz’s visit to Sweden.

Scholz noted that half of EVs imported from China were produced by Western manufacturers.

“There are European and North American manufacturers that succeed on the Chinese market and which sell their vehicles in China, we need to remember that,” he said, stressing the importance of trade between the West and China.

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Earlier, Washington announced it was hiking tariffs on $18 billion worth of imports from China, targeting strategic sectors like batteries, steel, critical minerals, and electric vehicles.

The tariff rate on EVs is set to quadruple to 100 percent this year.

EU inquiry into Chinese EV subsidies

The European Union launched an inquiry into Chinese electric car subsidies last year, fearing that they were a threat to Europe’s own vast automotive industry.

Once its probe is concluded, the EU could decide to hike tariffs on cars imported from China beyond the current 10 percent.

“We don’t yet know the results of the investigation,” Scholz stressed.

READ: BMW says EU probe into China EV subsidies against free trade

EU chief Ursula von der Leyen met Chinese President Xi Jinping for talks last week in France, where she said she had “made clear that the current imbalances in market access are not sustainable and need to be addressed”.

“China is currently manufacturing, with massive subsidies, more than it is selling due to its own weak domestic demand. This is leading to an oversupply of Chinese subsidized goods, such as EVs and steel, that is leading to unfair trade,” she said.

“Europe cannot accept such market-distorting practices that could lead to de-industrialization in Europe.”

Beijing has reacted furiously to what it calls EU “protectionism”, and denied there was any problem of Chinese overcapacity.

‘Don’t be naive’

The possibility of European tariffs has ruffled feathers in Germany, whose companies own many plants in China that export back to Europe.

Oliver Zipse — CEO of BMW, which has major investments in China, the world’s biggest car market, last week warned the EU it could “shoot yourself in the foot”.

A recent study by the European umbrella organization Transport & Environment (T&E) showed that around 20 percent of all-electric vehicles sold in the EU last year, or 300,000 units, were made in China.

More than half of those were made by Western brands, including Tesla, Dacia, and BMW, which produce them in China for export.

Kristersson said Europe should “not be naive.”

“We’ve learned that supply can be disrupted for a number of reasons, whether it be due to pandemics or wars. And we have good reason to demand a level playing field” on the global market, he said.

“There are good reasons to push for strong reciprocity between countries, but a trade war where we block each others’ products is not the future of big industrial countries like Germany and Sweden,” Kristersson said.

In 2023, Swedish carmaker Volvo Cars, owned by Chinese group Geely, sold 42 percent of its cars in Europe and 24 percent in China.

In the process of phasing out combustion engines in favor of electric vehicles, it has three assembly plants in China and two in Europe, with a third under construction in Slovakia.