Sander Tordoir
Chief economist at the Centre for European Reform
Berlin’s “nein” in the vote on introducing EU tariffs on Chinese electric vehicles came despite the fact that the European Commission was following World Trade Organisation’s rules to offset China’s automotive subsidies. Chancellor Olaf Scholz appeared to be protecting the short-term export interests of German car manufacturers and may have hoped to divert Chinese retaliation toward exports like Spanish pork or French brandy.
But his decision signals two strategic risks. First, Berlin must weigh the exposures of its firms operating in China—and their still sizeable but declining exports—against the threat that Beijing poses to Germany’s long-term future as a manufacturing hub. Few Western countries’ industrial structures overlap more with China’s emerging one than Germany’s.
Second, If Germany pushes for a minimum price instead of tariffs, as China is still advocating, it would demonstrate that Beijing was able to force the EU to back down. This could backfire, as it would make it harder for European Commission President Ursula von der Leyen to collaborate with the United States on China in exchange for more support for Ukraine while also potentially negatively impacting Germany’s access to the U.S. market, which has overtaken China as Berlin’s largest trading partner.
Over time, Berlin may find itself thanking its true friends and more principled free-trade bulwarks like the Netherlands or Ireland for avoiding a strategic blunder.
Abigaël Vasselier
Director for Policy and European Affairs at MERICS
Germany is expected to play a leadership role in shaping the EU’s China policy due to its unique economic and trade relationship with Europe’s second trading partner. So far, Germany has fallen short of expectations, using its political weight to support the European agenda but not driving it.
Germany’s decision to vote against EU tariffs on Chinese electric vehicles instead of abstaining is a clear signal that Germany has growing concerns over the politicization of the trade relationship which could lead to a trade war with China. The visible fragmentation of the German political landscape and business communities also shows that like in many other member states, there is more work to be done on coherence, cohesion, and derisking. Following defeats in local elections and pressure from German industry, the chancellery chose to prioritize national considerations over European interests. Given Germany’s importance, this is a serious setback for European cohesion.
In such a context, it is difficult to see a German strategic culture and leadership role emerging. Regardless, the German vote is part of a constellation of twenty-seven national interests and on October 4, Europe came across as united on imposing countervailing duties on Chinese electric vehicles. This makes Europe more consequential in its relationship with China.
Daniel Gros
Director of the Institute for European Policymaking at Bocconi University
The vote on EU tariffs on Chinese electric vehicles (EVs) is not the first time that Germany is outvoted in the Council. It happens quite often. For the German government this serves as a healthy antibody to the notion that Germany dominates the EU.
The proximate reason for the German vote was to show support for its domestic car makers that are heavily invested in China and maybe provide a nod to China that it wants to keep the EU market open. But instead of focusing on the political symbolism, one should concentrate on the substance of the issue, which is simply that taxing imports of EVs made in China is bad economics and bad for Europe’s green transition, which can succeed only if electrical vehicles become cheap.
Importing EVs from China does not create a dependency. The European economy can function without them—but not without natural gas. But these imports serve as a source of cheap green goods and competitive pressure for EU industry to become more productive.
The fear that Chinese imports will destroy the EU automotive industry is vastly overblown given that, after an initial spurt, imports from China have slowed down, and the EU maintains a trade surplus in EVs.
Judy Dempsey
Nonresident senior fellow at Carnegie Europe
Chancellor Olaf Scholz could have abstained instead of voting against EU tariffs on Chinese electric cars. He didn’t. He feared retaliatory measures from Beijing at a time when Germany’s car industry is in a profound crisis—thanks to the complacency of the political elites, the car lobbies, and lack of strategic foresight.
For decades they supported the automobile sector, taking for granted that the Chinese consumer would buy a fancy German car. Not anymore. China is speeding ahead with electric cars that Germans are buying. It’s not just because they are less expensive than German models. It’s because Volkswagen and co. refused to embrace innovation, digitization, and artificial intelligence. German governments have paid lip service to modernizing an infrastructure to spur competitiveness.
It’s the same short-sightedness as when Germany depended on Russian gas. That deterred pushing ahead with renewable energy and countering climate change. Russia’s invasion of Ukraine in 2022 finally changed the German mindset on energy policy.
Berlin’s mindset over China, despite the European Commission’s “derisking” strategy toward Beijing, won’t change until there is a fundamental strategic shift in the German economic model. That would mean Scholz, his coalition partners, and the lobbies accepting that de-industrialization is the future. Don’t count on it.
Thorsten Benner
Co-founder and director of the Global Public Policy Institute
It’s not exactly news that German policymakers allow the outsized dependencies on the Chinese market of a few large German companies—especially in the automotive sector—to lead to decisions against the overall long-term national interest. The vote against EU countervailing duties is just the most recent example.
But the even more worrying trend is that Germany is on track to becoming the primary victim of the second China shock with Chinese competitors increasingly eating the lunch of German industrial majors and small and medium enterprises, not just on the Chinese market but also in third markets and the European home market—from automotive to machine tools.
German Chancellor Olaf Scholz’s big gamble is that German companies will thrive in the competition from China as they always have. He seems to think that given its own economic dire straits Beijing will be cooperative without much pressure and that there is no need for protective measures. Scholz is literally betting the house on this. If he turns out to be wrong, the erosion of Germany’s base of prosperity will have ripple effects comparable to the U.S. election of Donald Trump and Brexit, which were the by-products of the first China shock that never hit Germany.
Zsuzsa Anna Ferenczy
Assistant professor at National Dong Hwa University, Taiwan
Berlin has a China problem, one it doesn’t seem to want to fix. Its reliance on Chinese supplies of specific raw materials and intermediate and final products, particularly in electronics, has forced Berlin to rethink its dependencies. On paper, the official commitment was clear: Berlin is changing its course, positioning Germany’s China policy “within the framework of the joint EU-China policy.” In other words, Berlin is Europeanizing its approach, aligning it with the rest of the EU, as divided as the bloc is. But these commitments have yet to be followed through.
The reality is, Berlin has another problem: a coherence and consistency problem. In all fairness, to replace China as a supplier is difficult, given its dominant role in the global market. But following through on commitments to collective action should not be. Ignoring these damages Berlin’s credibility and leadership ambition, much needed as the bloc is finally embracing an assertive posture toward China.
To be effective, member states must move if not at the same pace, at least in the same direction. Berlin’s choice to vote against EU tariffs on Chinese electric vehicles suggests it doesn’t have the political will to fix its problems—at least not yet and not through collective action. Because Berlin has a dependency problem.
Arthur Leichthammer
Policy fellow for Geoeconomics at the Jacques Delors Centre
The German chancellor’s decision to force a “no” in the vote on EU tariffs on Chinese electric vehicles, despite opposition from his green coalition partners, the European Commission, and other EU member states, already reflects existing dependencies.
Since the aftermath of the financial crisis, certain sectors of Germany’s export-driven economy have been highly reliant on the Chinese market, and as such exposed to painful retaliation. This is especially true for Germany’s car manufacturers. While the chancellor would have indeed liked to see the tariffs averted, Berlin will have been aware of its unlikelihood. The last-minute antics can rather be understood as a public communication stunt. Scholz will hope that his efforts will be acknowledged by Beijing, sparing car manufacturers from tariff retaliation, and avoid domestic opposition from a politically sensitive sector that is already in significant economic trouble.
From a strategic viewpoint, this is problematic. It highlights Germany’s aversion to understanding foreign economic relations through a European perspective. By prioritizing national interests, Berlin undermines efforts to create a comprehensive strategy on how to deal with China’s subsidy-fueled industrial policy, while weakening the EU’s negotiating position. To achieve the forward-looking and strategic foreign policy envisioned in the Zeitenwende speech, Scholz should reflect on his emphasis that a united Europe is the prerequisite.
Etienne Höra and Lucas Guttenberg
Project manager and senior advisor at Bertelsmann Stiftung, respectively
Germany’s vote against EU tariffs on Chinese electric cars shows a bewildering lack of understanding of its own long-term economic and geostrategic interests.
Zeitenwende and Berlin’s reckoning with its dependence on Russia has apparently made it harder to take an assertive stance toward China in the short run. Germany’s economic model is fundamentally challenged by the end of cheap natural gas from Russia and an underlying structural crisis of its industry with car manufacturers at its core. Safeguarding the other end of the supply chain, market access in China, seems to trump other considerations.
That is a problem for Germany itself: if it is to survive as an industrial hub, its companies and factories need to be able to compete on a level playing field with China—this is what the European Commission wants to ultimately achieve even if it initially hurts. And it is a problem for the whole of the EU: if the commission and the member state with the biggest car manufacturers can’t see eye-to-eye on how to manage Europe’s auto industry, Europe really does not have an industrial strategy to speak of. To get there, Germany will need to first better understand its own long-term interests.
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