In an open letter to EU leaders, the European Automobile Manufacturers’ Association (ACEA) urged the EU to prioritize strong trade ties with both the US and China.
Major car manufacturers, including Mercedes-Benz and BMW, appealed to the European Commission for a “grand bargain” with incoming US president Donald Trump. Their goal is to safeguard the European automotive sector amidst growing tensions between the EU and the US, with fears of a looming trade war.
Trump, set to be sworn in on Monday, has announced plans to impose significant tariffs on Chinese imports to the US. Concerns are rising that his administration may target nations maintaining strong trade relations with China.
The ACEA has called on the European Commission to ensure that trade with both China and the US remains as open as possible. The association stressed the importance of these markets for the success of Europe’s car industry, which includes brands like BMW, Ford, Renault, Jaguar Land Rover, Opel, and Volkswagen.
ACEA Warns Against Protectionism
Ola Källenius, newly elected ACEA president, highlighted in the letter that Europe should avoid policies that could destabilize established supply chains.
“With regard to China, maintaining a level playing field should not mean severing markets or disrupting well-functioning supply chains,” said Källenius. “The EU should focus on strengthening its internal market and enhancing its resilience rather than building barriers.”
He emphasized the shared goals of the EU and China to protect domestic jobs while benefiting from free international trade. He acknowledged ongoing negotiations in the EU anti-subsidy case and urged policymakers to finalize a positive agreement quickly.
Källenius also cautioned that protectionist measures rarely provide long-term solutions and reiterated that trade wars have no winners.
European Auto Industry Faces Mounting Challenges
The European car industry continues to face difficulties, particularly with growing competition from Chinese manufacturers offering affordable, feature-rich, and often subsidized vehicles.
In response, the EU has increased tariffs on Chinese electric vehicle (EV) imports, a move that has sparked opposition, especially from German automakers. German brands like BMW, Volkswagen, Audi, and Mercedes-Benz have significant operations in China and benefit from perks such as lower land costs, tax incentives, and subsidies provided by the Chinese government.
China remains one of the largest markets for European automakers, but concerns are growing about potential retaliatory tariffs from Beijing. Volkswagen recently sold its Xinjiang operations, citing “economic reasons.”
As the European automotive sector navigates these challenges, industry leaders stress the importance of diplomacy and balanced trade policies to protect jobs and ensure long-term success in global markets.