The German automobile industry is confronting a new wave of tension with China. VDA president Hildegard Mueller announced that the trade balance with the Asian giant is tilting unfavourably, prompting the association to explore protective mechanisms anchored in World Trade Organization rules. At the same time, Chinese commerce officials are urging the European Union to keep its doors open, warning that any turn toward protectionism could deepen the rift.
VDA’s warning and the WTO-based toolbox
During a press briefing on 24 September, Mueller highlighted a “growing trade imbalance” that threatens fair competition for German carmakers. She stressed that while the preferred route is dialogue the EU possesses legal instruments that can be activated when market distortions become evident. These measures, she said, would be deployed only after careful consultation with the affected sector to avoid premature protectionism. Mueller also cautioned that isolationist policies carry the risk of escalating disputes, a point echoed by industry analysts who see any abrupt tariffs as a potential trigger for a broader trade war.
Beijing’s appeal for open markets
China’s commerce minister, Wang Wentao, met with Mueller earlier in the week and later held a video call with Mercedes-Benz CEO Ola Källenius. Wang framed the automobile industry as a cornerstone of Sino-EU cooperation and urged the EU to maintain “fair, open and non-discriminatory” conditions for Chinese automakers. He warned that turning to protectionist measures would not only harm Chinese exporters but also jeopardise the EU’s own manufacturers that rely on Chinese components, especially batteries. Beijing signalled its intention to address any friction through the established China-EU trade and investment consultation mechanism.
German security plan and looming tariff decisions
In parallel with diplomatic overtures, Berlin is drafting an economic-security package aimed at shielding strategic sectors from perceived risks. The proposal, slated for cabinet approval on 14 October, could introduce new duties on hybrid electric vehicles and tighten export controls on advanced technologies. Should the plan move forward, it will be presented to the European Commission for broader EU endorsement, potentially reshaping the tariff landscape for Chinese cars entering Europe.
Numbers that tell the story: soaring Chinese imports, waning German exports
Official statistics for the first seven months of 2026 reveal a dramatic shift. Imports of new passenger cars from China reached 175,000 units, a 120.9 % increase over the same period last year, catapulting China to the top spot among suppliers to Germany. By contrast, German exports of new passenger cars fell to about 2 million units, a 4 % decline, and their total value dropped 8.9 % to €73.5 billion. The surge is largely driven by plug-in hybrid electric vehicles, which face a modest 10 % duty, while fully electric models continue to shoulder tariffs as high as 45 % under current EU rules.
These figures underscore the competitive pressure on European manufacturers. Many Western carmakers now source battery cells and critical components from China, which controls over 80 % of global battery cell production. The reliance on Chinese supply chains adds urgency to the debate over whether stricter tariffs or wider market access would better protect European industries.
Both sides agree that the issue cannot be resolved through unilateral action alone. Mueller reiterated the need for a dialogue-first approach, while Wang warned that any move toward market closure would reverberate globally. As October approaches, the EU’s decision on the security package and the VDA’s possible push for WTO-backed tariffs will shape the next chapter of the Europe-China automotive relationship.
