US punitive tariffs against China: Europe is also affected
The impact of the US punitive tariffs on e-cars and semiconductors on Germany and the EU is assessed differently by politicians and businesses.
Vehicles from the Chinese manufacturer BYD in the port.
(Image: BYD)
The US government's announcement to impose high punitive tariffs on the import of certain economic goods from China is also causing intense debate in Germany. Politicians and business representatives disagree on what impact the US measures will have on Germany and the European Union – and how Europeans should now react.
On Tuesday, the US government announced that electric vehicles from China will be subject to a 100 percent levy in future. The customs tariff for lithium-ion batteries, provided they are used in electric vehicles, will rise to 25 percent; for other lithium-ion batteries, this will not happen until 2026. Components for batteries will now also be subject to a 25 percent duty.
The duty on solar cells will also rise to 50 percent. Permanent magnets, such as those used in wind turbines, will be subject to a 25 percent duty. Semiconductors are to be subject to a 50 percent duty from 2025. There will also be increased duties for port cranes and medical products.
US election campaign bluster or trade war
Are these punitive measures taken by the US government just actionism in the run-up to the presidential election campaign? The likely Republican candidate, Donald Trump, who has relevant experience with sanctions against Chinese companies, immediately called for even more far-reaching measures. Or is it the prelude to a new trade war between the major economic powers USA and China, in which Europe would be massively affected?
The US government's decision is based on an extensive stocktaking. In her Bestandsaufnahme of sanctions against China, US Trade Representative Katherine Tai (USTR) describes how and why the People's Republic does not adhere to the principles of global trade and gains unfair advantages.
The list of accusations is long: from the classic case of espionage by an employee of Chinese state security in the USA, the transfer of technology through joint ventures to industrial espionage by the Chinese group APT27, which is classified as close to the state and has also been brought to the attention of the German Office for the Protection of the Constitution. "Instead of tackling fundamental reforms, the People's Republic has stuck to its guns and in some cases even become more aggressive," according to a USTR statement.
The US government has several objectives. Battery electric vehicles (BEV) from China have only played a minor role on the US market to date. Just under 10 percent of all cars sold in the USA from January to April have an electric drive, less than a third of which come from China. The US government's push can therefore be explained more by current developments and medium-term expectations: China's manufacturers are currently massively undercutting each other on prices, while export capacity is increasing in parallel.
Chinese shipping companies and car manufacturers are currently investing not least in car carriers - according to Chinese media reports, Cosco alone has ordered 24 large roll-on roll-off (RoRo) ships, while Chinese car manufacturer BYD is targeting eight such ships - the "Explorer No. 1" brought 3,000 vehicles to Bremerhaven in February. The output of Chinese car manufacturers is aimed at the global market - and this includes the USA, at least in perspective. The US government wants to put a stop to this at an early stage.
EU proceedings still ongoing
There is also an intense debate in the EU about whether China is distorting the market with subsidies for its car manufacturers and thus gaining an unfair competitive advantage. A corresponding investigation by the EU Commission was launched in October and the results are not yet available. However, the EU Commission issued a clear warning at the beginning of May: BYD, SAIC and Geely had so far failed to provide the required documentation.
Should the EU Commission impose penalties, these could also apply retroactively. According to market researchers at JATO, 20 percent of BEVs registered in the EU in January and February were produced in China, while 33 percent came from German factories. However, there is a major difference between the USA and the EU: many electric vehicles manufactured in China belong to European brands.
This is precisely what Chancellor Olaf Scholz (SPD) sees as a significant difference, as he explained on Tuesday: he wanted to point out that "50 percent of imports of electric vehicles from China come from Western brands that produce there themselves and import them to Europe." European manufacturers also sell successfully in China and to China. "That is perhaps also a difference in perspective," said the Chancellor.
The White House and the Department of Commerce have made no secret of the fact that the USA sees things differently: the Biden administration has invested heavily in the USA over the past two years in order to build up production capacities for a wide range of industries. The Inflation Reduction Act (IRA) promised tax breaks for companies in many industries considered critical, while the CHIPS Act promised billions to establish a semiconductor ecosystem.
