China Premier Snubs German Vice Chancellor, As Beijing Agrees To Talk With Europe Over EV Tariffs

After several weeks of escalating tit-for-tat trade war salvos between China and Europe, threatening to scuttle billions in auto trade between the two blocs, over the weekend China agreed to enter talks with the EU over its decision to impose higher tariffs on imports of Chinese electric vehicles during a visit to Beijing by Germany’s vice-chancellor, which was aimed at soothing tensions.

Robert Habeck, Germany’s minister for economic affairs and climate action, the same minister who was crucified by Deutsche Boerse CEO Theodor Weimer in his recent rant, welcomed the move by China to enter discussions with Brussels on EU tariffs but said it was “a first step and many more will be necessary”.

His comments came after China’s ministry of commerce said Beijing and Brussels had agreed to launch consultations on an anti-subsidy investigation launched by the EU last year. The probe led to a decision this month to increase tariffs on Chinese EVs to as high as 48%, which in turn provoked China’s anger and threats to retaliate in kind on Europe’s internal combustion cars. The announcement followed a video conference between China’s minister of commerce Wang Wentao and EU executive vice-president and trade commissioner Valdis Dombrovskis.

As previously reported, Germany – whose economy has been in peril for the past 2 years caught by the double whammy of soaring energy prices and shrinking Chinese imports of German goods – has been critical of the EU’s decision to increase tariffs on imports of Chinese EVs and Habeck is the first senior European politician to visit the country since the extra duties were announced.

The Chinese market is crucially important for Germany’s vast carmaking industry, making Berlin particularly vulnerable to any retaliatory measures by Beijing, which has already announced its own anti-dumping investigation into EU pork products.

While he struck a conciliatory tone on tariffs, which are yet to be finalized, Habeck was also critical of China’s growing exports to Russia and cited Germany’s efforts to stop exports of “dual-use” goods with potential military applications.

“I looked at the trade figures and Chinese trade with Russia increased more than 40% last year,” he said. “Of course energy is a high part [of] it, but something like half of it is related to dual-use goods. These are technically goods that can be used on the battlefield and this has to stop.”

Spoiler alert: it won’t stop since Germany needs Chinese buyers more than China needs to placate Germany. China is one of Germany’s largest trading partners and Berlin has sought to carefully navigate rising tensions between Beijing and Washington that increased sharply following Russia’s invasion of Ukraine in 2022.

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Zero Hedge

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