Scholz and Kristersson Voice Concerns Over EU Tariffs on Chinese EVs

German Chancellor Olaf Scholz and Swedish Prime Minister Ulf Kristersson express reservations about potential EU tariffs on Chinese electric vehicles, citing concerns about dismantling global trade and sparking a trade war with China, amidst the EU's inquiry into Chinese electric car subsidies and the US's recent hike in tariffs on Chinese EV imports." This description focuses on the primary topic of EU tariffs on Chinese electric vehicles, the main entities involved (Scholz, Kristersson, EU, China, and US), and the context of global trade and trade wars. It also highlights the significant actions and implications of the story, including the potential consequences of tariffs on the global automotive industry and trade dynamics between the EU and China.

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Bijay Laxmi
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Scholz and Kristersson Voice Concerns Over EU Tariffs on Chinese EVs

Scholz and Kristersson Voice Concerns Over EU Tariffs on Chinese EVs

On Tuesday, German Chancellor Olaf Scholz and Swedish Prime Minister Ulf Kristersson expressed reservations about potential European Union tariffs on Chinese electric vehicles during a press conference at the Norrsken Foundation innovation centre in Stockholm. Their concerns come as the EU considers following the United States in imposing duties on Chinese EVs, with Washington recently announcing it was hiking tariffs to 100% this year on $18 billion worth of imports from China, including electric vehicles.

Why this matters: The potential EU tariffs on Chinese electric vehicles could have significant implications for the global automotive industry and trade dynamics between the EU and China. If implemented, these tariffs could lead to retaliatory measures from China, sparking a trade war that could harm economies on both sides.

Kristersson cautioned against dismantling global trade through tariffs. "As far as tariffs are concerned, we are in agreement that it is a bad idea... to dismantle global trade," he said. Scholz highlighted the presence of European and North American manufacturers succeeding in the Chinese market, stating, "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."

The European Union launched an inquiry into Chinese electric car subsidies last year, fearing they were a threat to Europe's own vast automotive industry. The EU could decide to hike tariffs on cars imported from China beyond the current 10% once the probe is concluded. Around 20% of all electric vehicles sold in the EU last year, or 300,000 units, were made in China, with more than half produced by Western brands like Tesla, Dacia, and BMW for export.

The possibility of European tariffs has ruffled feathers in Germany, whose companies own many plants in China that export back to Europe. Volvo Cars, owned by Chinese group Geely, sold 42% of its cars in Europe and 24% in China in 2023. EU chief Ursula von der Leyen met Chinese President Xi Jinping for talks last week, stressing the need to address "market distorting practices" that could lead to de-industrialization in Europe. Beijing has reacted furiously to what it calls EU "protectionism", denying any problem of Chinese overcapacity.

Kristersson acknowledged the need for a level playing field and strong reciprocity between countries in the global market, while cautioning that a trade war blocking each others' products is not the future for major industrial nations like Germany and Sweden. The leaders' reservations underscore the complex trade dynamics between the EU and China, as Europe seeks to balance concerns over Chinese subsidies with maintaining access to the crucial Chinese market for its own automotive industry.

Key Takeaways

  • German Chancellor Olaf Scholz and Swedish PM Ulf Kristersson oppose EU tariffs on Chinese electric vehicles.
  • Potential tariffs could lead to a trade war, harming economies on both sides.
  • EU launched an inquiry into Chinese EV subsidies, fearing a threat to Europe's automotive industry.
  • 20% of EU's electric vehicles sold last year were made in China, including Western brands.
  • EU seeks to balance concerns over Chinese subsidies with maintaining access to the Chinese market.