The European elections had only been over for a few days when the EU Commission came around the corner with a decision that was not even being called for by the industry it impacts. In future, e-cars produced in China will be subject to punitive tariffs of up to 38%. Together with the existing import duty of 10%, this means that a maximum of 48% will be due. That is even more than was previously discussed. Who will be most severely affected by the tariffs in force from 4 July? The state-owned car manufacturer SAIC, whose MG brand accounted for 1.6% of European car sales last year – more than any other Chinese manufacturer? In absolute numbers, Tesla would be the most affected. With their Model 3, the Americans are shipping the highest number of units from China to Europe. However, the EU wants to look at Tesla's situation separately, and possibly apply a lower tariff for the US manufacturer.

In view of the individual punitive tariffs, which affect different car manufacturers to varying degrees, it is to be feared that the EU could find it difficult to defend its actions at the World Trade Organisation (WTO). On the other hand, it should be easy for the Chinese to announce the previously threatened tariff increase for large-engined combustion engines as a climate protection measure. The latter would hit the German car industry particularly hard. Porsche, for example, has to import every car it sells there due to a lack of production in China. But even at Mercedes, one in five cars sold in the country are not manufactured there. BMW, meanwhile, manufactures the iX3, which was developed and designed in Munich, exclusively in China, and would therefore also have to pay import duties on sales in the EU.

The outrage of the German Association of the Automotive Industry (VDA) and local manufacturers is therefore strong. However, their appeal for open global trade went unheard in Brussels, as did the criticism from German politicians, including Chancellor Olaf Scholz and opposition leader Friedrich Merz. The fact that Commission President Ursula von der Leyen has followed the line of French President Emmanuel Macron here is probably also a political calculation, in view of the disastrous performance of the ruling Renaissance party and the upcoming elections in France on 30 June. Making such a far-reaching decision for political reasons, and apparently against the explicit objections of a key industry, is grist to the mill of critics of EU industrial policy. And if there is one thing it does not need at the moment, it is a further increase in Euroscepticism.

Equally serious, however, is the fact that the industry, which is already under pressure as a result of the transformation, will not be helped at all by the tougher course taken with regard to China. This is because China has long had the upper hand when it comes to electromobility. The two battery manufacturers CATL and BYD together had a global market share of more than 52% in the first quarter. The Middle Kingdom has also moved into pole position in terms of raw materials over the past decade. In addition, China is by far the largest sales market for electric cars. Chinese car manufacturers also have numerous cost advantages – for example in terms of energy and labour. Analysts have already calculated that most suppliers may be able to simply swallow the higher import duties in the EU without any major price adjustments, due to their healthy margins.

Meanwhile, German car manufacturers are dependent on the Chinese market for their premium strategy. If they lose marketshare even faster there as a result of the trade dispute, this will place an additional burden on the costly economic transformation. The fact that the Commission President, who is currently seeking votes for a second term in office in Europe, has scored an own goal in terms of industrial policy immediately after the election should actually disqualify her from continuing in office. Even the German government is likely to find it increasingly difficult to proactively support von der Leyen if she is simultaneously stabbing local industrial policy interests in the back in such a way.