Senior European auto executives this week told Brussels please don’t try to help us by raising import tariffs on Chinese EVs. The status quo cannot continue.
Stellantis CEO Carlos Tavares told Reuters that tariffs are a “trap,” that would fuel inflation, depress European demand and give false hope that European automakers and suppliers could avoid the actions needed to close what he reckoned is a 30% cost disadvantage compared to Chinese EV makers.
Executives of Volkswagen and Renault, speaking at the Reuters Events Automotive Europe conference echoed the anti-tariff view.
VW Chief Financial Officer Arno Antlitz told the Reuters conference that Chinese competitors will localize production in Europe – not rely on imports. “We have to prepare for that. We have two to three years,” he said.
That two to three year grace period could be optimistic. Chinese automaker Nio opened a new showroom in Amsterdam on Monday, and CEO William Li said he plans to push ahead with European expansion.
Volkswagen, as well as Mercedes-Benz and BMW, are highly exposed should China impose retaliatory tariffs – a threat made explicit by a policy think tank affiliated with the Chinese government. The think tank said Beijing should slap tariffs on vehicles with large engines.
That’s another way of saying, whack German SUVs and luxury cars. German automakers’ shares fell on the warning.
German automakers’ U.S. factories could also be collateral damage if the U.S. goes through with proposals to impose 100% tariffs on Chinese EVs, and 25% duties on Chinese EV materials. Detroit automakers could suffer if battery costs go up.
The long-term competitive worries of senior industry executives are for now taking a back seat as Western politicians and policy makers respond to the surge in Chinese EV and green technology exports.
This is an election year in the U.S. and Europe. Standing up to China is one thing left and right agree on in both markets.
