In a direct appeal to EU leaders, the European Automobile Manufacturers’ Association (ACEA) has stressed the importance of maintaining stable trade relations with both the US and China.
Major European carmakers, including Mercedes-Benz and BMW, have called on the European Commission to negotiate a “grand bargain” with incoming US president Donald Trump. This plea comes amidst worsening tensions between the EU and US, heightening fears of a trade war.
Trump, set to take office on Monday, has announced plans to impose heavy tariffs on Chinese imports. Concerns are growing that the US could retaliate against countries maintaining strong trade ties with China.
The ACEA has urged the EU to ensure open trade with both China and the US, emphasizing the critical role these markets play in the European car industry’s success. The ACEA represents leading automakers like BMW, Ford of Europe, Jaguar Land Rover, Renault Group, Opel Group, and Volkswagen Group.
ACEA Warns Against Protectionism
Ola Källenius, newly elected ACEA president, outlined the risks of protectionism in a letter to EU leaders, emphasizing the importance of collaboration with China.
“Instead of cutting off markets, the European internal market should be strengthened and made more resilient,” Källenius wrote. He acknowledged the efforts of EU and Chinese policymakers to reach a resolution in the EU anti-subsidy case and urged swift progress toward a mutually acceptable solution.
He also noted that trade wars often yield no winners and stressed that protecting jobs through international trade agreements benefits all parties.
Challenges for the European Car Industry
European carmakers face growing competition from Chinese rivals, whose vehicles are typically more affordable and feature-rich, thanks to government subsidies. In response, the EU has imposed increased tariffs on Chinese electric vehicle (EV) imports.
However, German automakers have opposed these tariffs, fearing retaliation from China. Leading brands like BMW, Volkswagen, Audi, and Mercedes-Benz maintain significant operations in China, benefiting from incentives such as cheaper land and tax breaks.
China, one of the largest markets for European carmakers, remains a key concern for the industry. Retaliatory tariffs on European car imports could harm their global operations. Volkswagen, for instance, recently sold its Xinjiang operations, citing “economic reasons,” underscoring the delicate balance required in managing relations with the Chinese market.