Prospects of EU-Imposed Anti-Dumping Tariffs on Chinese Electric Vehicles... Germany Faces Losses, France Benefits

As the European Union (EU) announced a tariff bomb on Chinese electric vehicles, German automakers' stocks collectively showed weakness. This is due to concerns that reciprocal Chinese retaliation measures could hinder exports to China, a major market for German companies. On the other hand, French automakers, which have relatively low sales in China, are expected to benefit from a positive spillover effect.

On the 12th (local time), the German DAX index rose about 1.4%, but Volkswagen and BMW stocks closed down approximately 1.5% and 1.0%, respectively. Mercedes-Benz and Porsche Holding stocks also fell about 1.0% and 7.0%, respectively.

Philip Houshoah, an analyst at Jefferies, explained, "German automakers' stocks were hit due to concerns over Chinese retaliation."

Earlier, the EU Commission announced provisional tariffs ranging from 17.4% to 38.1% points on Chinese electric vehicles, citing the massive subsidies they receive.

The current tariff rate imposed by the EU on Chinese electric vehicles is 10%, and adding this would result in a maximum tariff of 48.1%. This provisional plan is expected to be finalized through a weighted majority vote by EU member states in November.

Germany, the largest automotive market in Europe, is actively opposing the EU's countervailing tariff measures. Since one-third of the sales volume of its major domestic automakers comes from Chinese demand, the enforcement of Chinese retaliation measures would inevitably cause significant damage.

Additionally, German companies such as BMW and Volkswagen, whose vehicles are produced in Chinese factories and imported into Europe, are also within the scope of impact.

The market expects that French automakers will greatly benefit from the EU's high tariffs. This is because the proportion of Chinese sales for French automakers is negligible. The strong close of Renault's stock price that day reflected foreign media analysis of positive prospects for French companies regarding the imposition of tariffs on Chinese electric vehicles.

Frank Schwoepe, an automotive industry lecturer at Hanover University of Applied Sciences, stated, "French automakers, for whom China is not a very important market, could benefit from China's measures against European imports." Politico reported that France supports high tariffs on Chinese electric vehicles to protect its domestic automotive industry.

Due to such conflicting interests, there is also a growing expectation that reaching an agreement among EU member states will not be easy.