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Germany battles to block Brussels clampdown on Chinese EVs

VW plant
VW plant

Germany is attempting to block the European Union’s new tariffs on Chinese electric vehicles amid concerns that retaliation by Beijing could hurt its car industry.

Government officials are said to be lobbying Brussels to either soften or block the new tariffs, according to Bloomberg. Officials in Berlin are hoping that the EU will be able to find a solution to the issue through direct talks with China.

The EU earlier this week announced tariffs on imports of Chinese electric vehicles (EVs) manufactured by a range of companies. The highest tariffs amount to a levy of 48pc.

The EU said it wanted to “level the playing field”, claiming that Chinese companies had benefited from unfair subsidies.

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China threatened legal action against the EU on Thursday in response, saying it “reserves the right” to file a suit with the World Trade Organisation.

German carmakers will be the most exposed to any retaliatory moves from Beijing as almost a third of their sales came from China in 2023, trade data shows.

In a note to clients, analysts at Bank of America wrote on Thursday: “The key question is now how China will react to higher EU tariffs.

“The risk is that import tariffs for German [car makers] will be raised in China too.”

They warned that Porsche, which is owned by Volkswagen, looked most exposed, with China accounting for around 30pc of the brand’s profits.

Almost €4.5bn (£3.7bn) was wiped off the value of Germany’s biggest car makers amid fears of a trade war between Europe and the world’s second largest economy. Shares in Volkswagen, BMW and Mercedes-Benz Group all fell on Thursday.

The EU tariffs will also directly affect some western car makers such as BMW and Tesla, which make cars in China and then export them to Europe.

The German economy ministry told Bloomberg: “The talks with China are being conducted by the European Commission, which also announced these talks.

“As usual, the government is in close contact with the European Commission.”