Germany looks to keep the peace by halting or at least softening incoming tariffs on Chinese EVs

Just days after the EU Commission determined EVs imported from China have an unfair advantage due to government subsidies and responding with higher tariffs, Germany, one of the region’s largest automotive markets, has spoken against the decision, stating the imposed tariffs could hurt the success of local automakers selling vehicles in China.

It has been a long saga leading up to this week’s decision by the EU Commission that Chinese EVs have an unfair advantage in European markets following a probe that began last fall. While the probe was taking place behind closed doors, the EU was already threatening tariffs on Chinese imports.

Meanwhile, the US didn’t need a probe (or many Chinese EV imports, for that matter) to impose its own steep tariffs. In retaliation, China threatened tariffs of up to 25% on European-built models like those from Germany, for example, imploring the EU to play fair and not follow the US’ decision.

Unfortunately for China, the EU Commission confirmed the results of its probe, hailing EV imports as unfair due to local subsidies. As a result, it announced plans to slap massive tariffs of up to 48% on those incoming models that are just starting to hit their stride in new markets overseas.

Days later, Germany spoke out against the EU’s decision on tariffs, expressing hope there is still time to reach an agreement to avoid them. Or, at the very least, soften those percentages.

Germany argues Chinese tariffs hurt EU automakers too

Following the EU Commission’s decision to impose tariffs on Chinese EVs next month, the government of Germany is stepping up to try to mediate tensions and, ideally, stop the upcharges altogether.

Per Automotive News Europe, a spokesperson with ties to Berlin officials who requested anonymity said the group remains optimistic the EU can resolve the issue through direct talks with China. With allies overseas, Germany believes there’s still room (and time) to reverse or soften the tariffs, but both sides must compromise.

Germany’s strongest argument is that retaliatory tariffs against China may also hurt local OEMs, including Volkswagen, Mercedes-Benz Group, and BMW – all of which rely heavily on sales in Asia, particularly China.

Mercedes-Benz is an especially popular automaker in China, and its G- and S-Class vehicles, in particular, have done well with those consumers. As the German automaker goes electric, Mercedes has seen EV growing sales in China and intends to bring its new all-electric G-Class overseas this year. Germany argues the EU’s tariffs could throw a wrench in those plans as its local OEMs could face the eye-for-eye wrath from the Chinese government.

Germany’s Economy Minister Robert Habeck said there’s still time to stop this looming tariff escalation and will travel to China next week to discuss the issue with government officials.