German automakers prepare for possible Chinese tariff retaliation

The announcement of new European Union (EU) tariffs on Chinese electric vehicles (EVs) has the German automotive industry preparing for the worst.

China has already placed tariffs on imports of brandy from within the bloc, which Brussels is challenging through the World Trade Organisation (WTO). Beijing is also considering similar levies on dairy and pork products. 

Michael Schumann, chairman of Germany's Federal Association for Economic Development and Foreign Trade (BWA), told CGTN that German companies worry that China will look their way.

"There's a likely scenario that China will retaliate," explained Schumann. "You've heard first ideas about how that retaliation could look. Again, that would hit German manufacturers disproportionately inside Europe and add fuel to the fire and make the situation even worse."

He added: "We could see the closure of plants. We could see layoffs of workers, adding to the crisis that we're currently facing."

Volkswagen is already discussing plant closures. While these are not directly linked to the China tariff issue, they show how the auto industry is under massive strain right now. 

Last year, the export of cars and car parts from Germany to China was worth just over $29 billion. Some of the major German car manufacturers rely on Chinese trade for a large proportion of their turnover. 

Christian Ach, head of BMW Germany, told CGTN that German companies will be directly impacted by the new EU tariffs. 

According to Ach: "We are also affected by the tariffs if you have in mind that we produce a lot of Minis and i3s in China. Our point of view is to keep the world open - we are against the tariffs."

Ach added: "We can now expect tariffs from the other side and I think having these tariffs in place is completely wrong." 

The EU Commission disagrees and insists that Chinese companies have benefited unfairly from subsidies that allow them to keep prices low. China's commerce ministry said it does not "agree (with) or accept" the European findings. 

Talks on alternatives to tariffs remain ongoing. 

Uli Brückner, Jean Monnet Professor for European Studies at Stanford University in Berlin, told CGTN that a lot of attention is turning to Germany's role in finding a solution. 

"The very practical negative consequences appear in Germany," said Brückner. "Germany will use its weight. Whether it succeeds or whether most countries that openly supported the Commission's position will succeed, that's too early to predict." 

The German side's message is that there simply has to be an alternative to tariffs. However, with the deadline for a deal now passed, when that alternative comes and how it will look is still very much up in the air.