EU at crossroads over trade with China

 

BRUSSELS – German government ministers urged talks with China and warned of a potential trade escalation on Wednesday after the European Commission publicly warned of possible punitive tariffs on Chinese electric vehicle imports.

Whether manufacturers will actually have to pay the tariffs of up to 38.1% depends on whether another solution can be found with China.

Vice Chancellor Robert Habeck, a Green, backed negotiations with China to solve the trade impasse and credited the European Commission with presenting a nuanced report – but also cautioned that the European Union risked an escalating trade conflict.

“It is crucial that we talk now,” Habeck said on Wednesday in Berlin. “Tariffs are always only the last resort as a political measure and often the worst way forward.”

Germany is a trade and export-oriented country that needs an open market and a level playing field, said Habeck, who is also Germany’s economy minister. Violations must be sanctioned, but there remains an opportunity to attempt to prevent an impending spiral.

“It would be really bad if tariffs were used as a protectionist tool, if we entered into a tariff race with China,” Habeck said. “Then the baby would be thrown out with the bathwater.”

German Transport Minister Volker Wissing, a member of the free-market liberal Free Democrats (FDP), warned of potential consequences of punitive tariffs.

“The European Commission’s punitive tariffs will hit German companies and their top products. Vehicles must become cheaper through more competition, open markets and significantly better production conditions in the EU, not through trade wars and market foreclosure,” Wissing wrote in a post on X.