Germany warns against trade barriers as EU readies EV tariffs

German Chancellor Olaf Scholz spoke out against restricting automotive trade as the European Union moves closer to slapping tariffs on electric vehicles imported from China.

Germany’s auto industry is benefiting from business in China and will be able to compete with the Asian country’s carmakers if trade remains “fair and free," Scholz said Saturday.

The EU is expected to unveil tariffs this month targeting Chinese electric cars following a probe into the country’s EV subsidies. Beijing has signalled it’s ready to unleash retaliatory duties on EU-made cars with large engines, a move that would hit Germany’s Mercedes-Benz, Porsche and BMW the most.

“Isolation and illegal customs barriers — that ultimately just makes everything more expensive, and everyone poorer," Scholz said at an event organized by Stellantis NV’s Opel in Ruesselsheim, Germany. “We do not close our markets to foreign companies, because we do not want that for our companies either."

Germany’s powerful car industry has pushed back against tariffs, saying its business with China secures jobs at home. An escalating trade spat would fuel inflation and delay the transition to a cleaner economy, former Volkswagen AG Chief Executive Officer Herbert Diess said earlier this month.

Brussels is making a decision on tariffs just as EV sales are slowing in Europe, with carmakers including Volkswagen AG and Mercedes-Benz Group AG adjusting their rollouts as a result.

Scholz said the industry should continue shifting to battery power to ensure it will remain competitive also in the years to come.

“Doubting progress, delaying renewal and transformation – that would have bitter consequences," Scholz said. “If we do that, others will overtake us."

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