Analysis: EU Support for China EV Tariffs Reveals Berlin’s Waning Influence

By Philip Blenkinsop

BRUSSELS – German Chancellor Olaf Scholz’s opposition to EU tariffs on Chinese electric vehicles could not prevent other European Union members from supporting the measure, highlighting Berlin’s difficulties in shaping EU policy amid divisions.

Germany was one of only five EU member states to oppose the tariffs, a decision influenced by months of lobbying from its automobile manufacturers, who depend on China for nearly a third of their sales. Consequently, the European Commission is set to implement anti-subsidy duties by the end of the month.

This situation contrasts sharply with a decade ago. In July 2013, swift negotiations between China, former German Chancellor Angela Merkel, and José Manuel Barroso, the then European Commission president, led to the abandonment of a proposal for EU tariffs on solar panels, replaced instead by an agreement on minimum pricing.

After 16 years of Merkel’s leadership, which saw Germany’s industry flourish and her effectively unify the EU, the current three-party coalition is now in charge of an economy facing a second year of contraction, prioritizing domestic issues over EU matters ahead of a challenging federal election in 2025.

Brussels has expressed frustration over the internal conflicts within Germany’s coalition government, insisting that such divisions undermine the influence of Europe’s largest economy and overall EU unity. While the Commission is committed to finding a compromise on the EV issue with Beijing, Germany’s rejection has diminished its negotiating power.

Analysts have noted that the divide between Germany and the rest of the EU hampers one of the Commission’s crucial goals: presenting a united front against foreign pressures on individual members.

Internally, a senior official from Germany’s foreign ministry emphasized the need for the EU to prevent unfair, market-distorting practices from China and indicated that tariffs should remain an option.

The Federation of German Industries also took a balanced stance, advocating for ongoing dialogue while supporting trade protections under certain conditions. They acknowledged the economic and geopolitical risks linked to close ties with China’s state-controlled economy.

This is not an isolated incident where a divided Germany has found itself at odds with its EU counterparts. In March, the EU endorsed a law requiring companies to audit their supply chains, which faced significant resistance from Germany’s pro-business Free Democrats, leading to Germany abstaining from the vote.

German opposition to Italian bank UniCredit’s proposed merger with Commerzbank has resulted in considerable frustration among policymakers at the European Central Bank, who highlighted Germany’s stated support for an EU banking union, which would likely necessitate cross-border mergers for effectiveness.

One area where Scholz has found a common stance is with Hungary, led by Prime Minister Viktor Orban, who criticized the EU tariffs on Chinese EVs as detrimental to both the European economy and the German automotive sector.

Orban remarked that Germany and European industry are struggling to persuade the Commission to adopt reasonable policies. However, he is known more for obstructing than guiding EU policymaking, contrasting sharply with Germany’s previously strong leadership role within the EU.

Zach Meyers, assistant director at the Centre for European Reform, noted that the dispute over the tariffs indicates Germany’s diminishing influence over EU trade policy, which has also been compounded by a relative reduction in France’s sway following changes in the Commission’s leadership.

Despite achieving a victory in the tariff battle, Noah Barkin, a senior advisor at the Rhodium Group, warned that the European Commission may struggle to develop a coherent policy towards China without Germany’s support. He cautioned that as long as short-term priorities dominate German politics, it will be challenging for the Commission to advance its new foreign economic policy agenda.