In an open letter to EU leaders, the European Automobile Manufacturers’ Association (ACEA) has highlighted why Europe should strive to maintain good trade relations with both the US and China.
European car giants including Mercedes-Benz and BMW have asked the European Commission to agree to a “grand bargain” with incoming US president Donald Trump, in order to protect the European car industry.
The plea comes as tensions worsen between the EU and US, with the risk of an escalating trade war.
Trump will be sworn in as the US president on Monday. He has already revealed that he intends to impose substantial tariffs on Chinese imports to the US and there are rising concerns that the new president may retaliate against countries which keep trading and maintaining good relations with China.
The European Automobile Manufacturers’ Association (ACEA) has urged the European Commission to do everything it can to ensure that trade with both China and the US is kept as open as possible.
The organisation has also emphasised that both China and the US are crucial to the success of the European car industry.
The ACEA represents a number of car companies including the BMW Group, Ford of Europe, Jaguar Land Rover, Renault Group, Opel Group and Volkswagen Group.
In a letter to EU leaders, newly elected president of the ACEA, Ola Källenius, said: “With regard to China, the level playing field should not be used in a way to cut off markets and endanger long established, well-functioning supply chains. Rather than raising walls, the European internal market should be strengthened and made more resilient.
“Both regions, the EU and China, want to protect jobs in their home markets, while reaping the benefits of free international trade. In that regard, both sides have an interest in finding an agreement. That’s why we acknowledge efforts by both EU and Chinese policymakers to find a mutually acceptable solution in the EU anti-subsidy case. These negotiations must come to a positive conclusion as soon as possible.”
Källenius also highlighted that protectionist measures may not always be the best solution in every solution, while also pointing out that trade wars have no winners.
European car industry continues to struggle
The European car industry is continuing to experience hurdles, in the face of rising competition from Chinese rivals, whose products are often cheaper and offer more inclusive features. They are also subsidised. This has led to the bloc imposing increased tariffs on Chinese electric vehicle (EV) makers importing their vehicles into the EU.
The German car industry has been particularly opposed to the tariffs, fearing retaliatory action. Several major German car brands such as BMW, Volkswagen, Audi and Mercedes-Benz have extensive operations in China.
They have been also offered a number of benefits by the Chinese government, such as cheaper land, tax breaks and more.
With China being one of the biggest markets for European car players, there are also increased concerns about the country imposing its own tariffs on car imports. Volkswagen already sold its Xinjiang operations, citing “economic reasons”.
