Ola Källenius says it will ‘weaken the industry on both sides’ ahead of act intended to counter non-EU competition
Locking the UK out of the EU’s flagship industrial “Made in Europe” legislation would amount to a “deliberate choice” by EU leaders to “hurt” the car industry across the bloc, the head of Mercedes-Benz has said.
Speaking in his capacity as president of the European Automobile Manufacturers’ Association (ACEA), Ola Källenius said such a move would “weaken the industry on both sides”.
President Donald Trump's tariffs are turning factory workers against his Republican Party over fears the import taxes could lead to fewer jobs instead of the manufacturing renaissance he promised.
Beijing has rebuffed a European Union request to voluntarily cap hybrid car exports to the bloc, raising the prospect of new, steep EU tariffs on Chinese hybrids, which have so far escaped the duties on pure electric vehicles. China has refused to set quotas on its exports of hybrid electric vehicles (HEVs) and plug-in hybrid […]
Mexico's auto exports posted their biggest slump so far this year, data from statistics office INEGI showed on Wednesday, a decline analysts attributed to tariff policies from the US, the biggest market for the Latin American country's top industrial sector.
China has warned that it will respond if the European Union introduces new trade restrictions targeting Chinese companies or products, as France and Germany push for stronger European instruments to address what they regard as unfair commercial practices.
China’s Ministry of Commerce issued the warning after reports that several EU governments were discussing a mechanism modelled partly on Section 301 of US trade law, which allows Washington to investigate foreign trade practices and impose countermeasures.
Beijing described such an approach as protectionist and unilateral and warned that it could damage continuing negotiations between China and the EU.
“If the European side insists on introducing discriminatory restrictive measures against Chinese companies or products,” the ministry said, China would “resolutely respond” to defend the interests of its industries.
The warning comes as Europe’s trade relationship with China is moving further up the political agenda.
According to the European Commission’s latest EU-China trade figures, EU exports to China were worth €199.5 billion in 2025 while imports reached €559.5 billion.
The goods deficit stood at €359.9 billion, compared with €312.2 billion in 2024.
China remained the EU’s largest source of goods imports and its fourth-largest export market.
Brussels argues that the scale of the imbalance is connected not only to competitiveness but also to state support, market-access restrictions and other structural differences between the two economies.
China disputes that assessment and has repeatedly accused the EU of using industrial and security arguments to justify protectionism.
The argument is already visible in several industries.
The EU imposed countervailing duties on Chinese battery electric vehicles after an investigation concluded that state subsidies were giving Chinese manufacturers an unfair advantage in the European market.
The automotive dispute is important because Europe is simultaneously trying to attract Chinese manufacturing investment.
France and Spain addressed that question during President Emmanuel Macron’s state visit to Madrid.
Macron and Spanish Prime Minister Pedro Sánchez agreed on the need for greater European unity in responding to Chinese competition. They also discussed whether Chinese investors entering strategically important European industries should be required to provide stronger commitments on issues such as technology transfer.
Macron said that companies on both sides of the Pyrenees needed protection when they faced unfair competition and argued that “the only response that works is European.”
France has generally favoured stronger European trade defences.
Germany has traditionally approached the issue more cautiously because major German manufacturers have substantial commercial exposure to China. Increasing competition from Chinese producers, particularly in industrial sectors where German companies were once dominant, has altered the debate.
Reports that Berlin and Paris are now working together on a stronger trade instrument therefore suggest a potentially important shift.
The two countries are said to be considering a European mechanism inspired by the American Section 301 process, although no final proposal has yet been adopted by the European Commission.
EU trade law already provides several instruments.
Brussels can impose anti-dumping or anti-subsidy duties following investigations, use the Foreign Subsidies Regulation to examine state-backed investment and procurement, and deploy the Anti-Coercion Instrument where another country uses economic pressure against the EU or a member state.
The discussion now concerns whether those instruments are sufficient when governments believe a problem extends across industries rather than affecting an individual product.
At the same time, Brussels and Beijing have established a Trade and Investment Consultations mechanism, with workstreams covering trade balances, export controls, intellectual property and World Trade Organisation reform.
China’s Commerce Ministry has warned that introducing tougher measures while those talks continue would damage trust.
That leaves the EU facing two parallel choices: continue negotiations intended to narrow the trade dispute while also developing stronger instruments in case those negotiations fail.
France and Germany are increasingly arguing that Europe needs greater leverage.
Beijing’s response is that using that leverage against Chinese companies would bring countermeasures.
The next stage will depend on whether the Franco-German proposal develops into a formal EU initiative. If it does, the dispute will move beyond duties on particular products towards a broader argument over how Europe intends to manage its economic relationship with China.
The details came days after Chinese President Xi Jinping met with U.S. President Donald Trump in Washington in his first state visit to the U.S. since 2015.
The details came days after Chinese President Xi Jinping met with U.S. President Donald Trump in Washington in his first state visit to the U.S. since 2015.
Beijing has agreed to work with Washington to improve governance of artificial intelligence (AI) technologies and to enhance cooperation as Chinese President Xi Jinping and United States President Donald Trump met face-to-face at the White House on Thursday. Xi made the pledge in his speech at a morning welcoming ceremony, before the two leaders held […]
European Union countries are rushing to find a joint response to threats by US President Donald Trump to impose an additional 10-percent tariff on goods from several European allies from February 1.
EU leaders are set to meet in Brussels on Thursday after Trump threatened that eight European countries would face higher tariffs until the United States secures what he described as the “complete and total purchase” of Greenland.
The US repeatedly said it wants the mineral-rich autonomous Danish territory of Greenland for “national security”, despite it already having a base on the island and long established security agreements with fellow NATO ally Denmark, which has controlled the Arctic island for about 300 years.
Denmark, Finland, France, Germany, the Netherlands, Norway, Sweden and the United Kingdom recently sent a small number of soldiers on a reconnaissance mission to Greenland as a sign of solidarity with Denmark, which is pushing back against Trump’s takeover ambitions.
“We won’t be blackmailed, and we stand together in solidarity in Europe,” said German Finance Minister Lars Klingbeil, arriving in Brussels on Monday for two days of previously planned talks with his EU counterparts. “We don’t want an escalation. We are not looking for an escalation, but we are ready if it comes,” Klingbeil said.
Italian Prime Minister Giorgia Meloni – considered one of Trump’s few allies in the EU – has called the new tariff threat a “mistake”.
In a different threat scenario, Trump also ramped up his rhetoric against France on Tuesday, warning he would impose 200 percent tariffs on French wine and champagne over its intentions to decline his invitation to join his “Board of Peace” set up to oversee the rebuilding of Gaza.
French President Emmanuel Macron said at the World Economic Forum (WEF) in Davos (Switzerland) on Tuesday: “What doesn’t make sense is to have tariffs between allies. We have to fix the war in Ukraine, we have to help the Ukrainians resist, and find a sustainable peace.”
Macron called the possibility of potentially activating the Anti-Coercion Instrument against the US “crazy” and added: “I do regret that. But this is a consequence of just unpredictability and useless aggressivity.”
European Commission President Ursula von der Leyen has warned Trump not to plunge transatlantic relations into a dangerous downward spiral over Greenland. “This is why the proposed additional tariffs are a mistake, especially between long-standing allies,” she said in Davos.
Arctic security can only be achieved together.
This is why the proposed additional tariffs are a mistake, especially between long-standing allies.
The EU and US have agreed to a trade deal last July.
Washington mayhem tests transatlantic alliance and post-WWII order
The leader of global rights group Amnesty International, Agnes Callamard,urged European countries Monday to stop “appeasing” Trump and to resist him and other “bullies” who she said were intent on destroying the rules-based order in place since World War II.
Since Trump’s return to the White House a year ago, he has taken “a range of decisions that have led to the demise of many rules around the world”, while Russia was destroying the system “through its aggression in Ukraine”, the human rights organisation’s secretary general told AFP in an interview in Davos.
The post-WWII order “is also being destroyed by Israel that has completely ignored international law in its genocide of Palestinians in Gaza”, she added.
Furthermore, European powers have been treading a thin line over Ukraine in recent months, relying on Washington to try to help settle the conflict but resisting terms too favourable to Moscow.
Trump meanwhile has put the transatlantic alliance to the test with threats to take over Greenland “one way or the other”, as European countries close ranks against Washington’s designs on the vast Danish autonomous territory.
In a message to Norway’s Prime Minister Jonas Gahr Store, Trump said “I no longer feel an obligation to think purely of Peace”, citing his failure to win last year’s Nobel Peace Prize despite openly coveting it. He said although peace would still be “predominant”, he could “now think about what is good and proper for the United States of America”.
Store said in a statement: “I have clearly explained, including to President Trump, what is well known – the prize is awarded by an independent Nobel Committee”, not the Norwegian government.
Danish soldiers disembark at the port of Nuuk. Photo: Mads Claus Rasmussen/Ritzau Scanpix Photo/AP/dpa
NATO ramps up Greenland presence amid search for unity
Amid the global tensions, Denmark is proposing that NATO start surveillance operations in Greenland, with the support of the Arctic island, Defence Minister Troels Lund Poulsen said Monday after meeting NATO’s chief Mark Rutte. The precise details of the proposal and the response from Rutteremain unknown.
While a number of NATO allies have sent troops to Greenland or have announced plans to do so despite the risk of additional US tariffs being imposed on them, others remain reluctant and divided over the move.
Belgium is sending a liaison officer to Greenland. Despite this decision, the country was not included on Trump’s list of sanctioned countries on Saturday. “But there is no guarantee that this will not be the case in the future and we must show solidarity with our colleagues”, Foreign minister Maxime Prévot said. He called the American measures “incomprehensible and unnecessarily hostile”.
Likewise, Slovenia on Saturday announced it would deploy two Armed Forces officers to Greenland to take part in the planning and implementation of the Danish-led international military exercise Arctic Endurance.
Poland’s Prime Minister Donald Tusk – whose country is a staunch NATO ally with the highest defence expenditure as a share of gross domestic product (GDP) in the EU – already said last week the country was “not planning to send Polish soldiers to Greenland”.
Contrary to false claims on social media that Germany had sent warships to Greenland, the country did send 15 soldiers to the island for a reconnaissance mission. The troops however left Greenland on Sunday after the mission was completed on schedule, according to the Ministry of Defence.
Spain has not announced plans to participate in the mission in Greenland. Defence Minister Margarita Robles however said recently that the country could join the group in the future.
At the same time, some NATO allies are still navigating how the Greenland dispute plays out in their domestic political debates.
Asked on Monday whether the government of the Czech Republic supports Greenland, Prime Minister Andrej Babiš said he could not give a clear answer. He added that the United States is the leader of NATO and that conflicts are counterproductive. “We definitely prefer that an agreement be reached within the alliance. It would be very unfortunate if there were to be any conflicts,” Babiš said.
In Bulgaria, political reactions are mixed. The outgoing government has not issued a position on the recent developments around Greenland, but reactions from parliament have begun to emerge.
On the one hand, the leader of Continue the Change – a party affiliated at European level with Renew Europe – Assen Vassilev, said that every country should have the right to determine its own future, rather than having its choices dictated by external powers.
On the other hand, Revival (Vazrazhdane) – whose MEPs sit with the Europe of Sovereign Nations Group in the European Parliament – backs the US claims over Greenland. Party leader Kostadin Kostadinov reiterated the party’s call for Bulgaria to withdraw from NATO and argued that tensions between Washington and Copenhagen expose deeper structural problems within both NATO and the European Union.
Slovakia’s Foreign Minister Juraj Blanár said “Slovakia considers Greenland to be part of Denmark”. He rejected tariff battles between states: “We prefer diplomacy and peace, not tension or fighting,” he said.
EU “trade bazooka” on standby
EU leaders will meet in Brussels on Thursday to discuss a coordinated response to the prospect of US tariffs – with its most powerful trade tool on the table.
The Anti-Coercion Instrument, a mechanism adopted in 2023, that can be used in cases of economic coercion when a non-EU country attempts to pressure the bloc or one of its 27 members into making a decision through trade restrictions.
Such practices “unduly interfere with the legitimate sovereign choices of the European Union and its member states”, the European Commission says on its website.
France had signalled its intention to request the activation of the instrument after Trump announced on Saturday that he would impose additional tariffs on the eight NATO allies.
To apply the instrument, the European Commission first has to examine whether economic coercion is present in the case. EU countries must then back the Commission’s conclusion, before the EU’s executive arm ideally enters into talks with the country. If these are unsuccessful, the EU can impose countermeasures.
Retaliatory measures under the ACI however are only a last resort and must be proportionate. Using it against the United States would be ”the very first time” the EU has ever applied the tool, Macron recalled in Davos on Tuesday.
Should the ACI be applied over Trump’s latest trade threats, retaliatory tariffs on imports of US goods are likely. The EU-US tariff agreement concluded in July could also be put on hold.
Under discussion is also the possibility of imposing additional tariffs on a list of goods with a total trade volume of 93 billion Euro (108 billion Dollar), including industrial and agricultural goods such as motorcycles, beef, whiskey and citrus fruits.
This article is an ENR Key Story. The content is based on information published by ENR participating agencies.
Brussels (dpa) – European Council President António Costa will convene a special summit following US President Donald Trump‘s new tariff threats in the Greenland dispute, with Thursday being considered a possible meeting date, an EU official said on Sunday.
While the date has not been definitively determined, it is clear that a meeting will take place.
Costa said that his consultations with member states on the recent tensions surrounding Greenland had made it clear that tariffs would undermine transatlantic relations and were incompatible with the EU-US trade agreement.
He said that the EU was prepared to defend itself against any form of coercion. At the same time, it wanted to continue to work constructively with the United States. There was a common transatlantic interest in peace and security in the Arctic, particularly through cooperation within NATO.
The meeting would involve EU heads of governments and states and comes after Trump announced on Saturday that he would impose a 10 percent tariff on goods from eight European countries from February 1, rising to 25 percent from June 1 if no resolution is reached to his satisfaction, which would be the “complete and total purchase” of Greenland.
European troops in Greenland
Six of the eight countries – Germany, France, the Netherlands, Denmark, Sweden and Finland – affected by the tariffs are EU members, while the United Kingdom and Norway are also on Trump’s list.
The tariffs come as the above mentioned NATO allies have sent soldiers to the Arctic island, something the Trump strongly criticised. “Denmark, Norway, Sweden, France, Germany, The United Kingdom, The Netherlands, and Finland have journeyed to Greenland, for purposes unknown,” he wrote, describing this as “a very dangerous situation for the Safety, Security, and Survival of our Planet” he wrote in a post on his Truth Social platform on Saturday.
On Sunday the eight nations issued a joint statement warning of a “dangerous downward spiral” stemming from Trump’s tariff announcement.
All eight countries are members of the NATO defence alliance. NATO chief Mark Rutte is to meet with ministers from Greenland and Denmark on Monday over the dispute.
Greenland, a largely autonomous Arctic island, is part of the Kingdom of Denmark and is therefore also in NATO. (18 January)
Growing popularity of electric vehicles (EVs) from China is causing headaches for European carmakers – and for Brussels, with national governments clamouring for protection for their national champions.
The European Commission, which is in charge of trade policies for the bloc, has to square the circle between avoiding a trade war and injecting some life into the idling economy.
In one recent step the EU is attempting to introduce minimum prices for Chinese made EVs to offset subsidies instead of slapping on more tariffs.
The EU in 2024 had introduced tariffs of up to 35.3 percent on EVs imported from China after an anti-subsidy probe concluded that the country’s support undercut European automakers. Manufacturers in China benefit from unfair subsidies that give them a significant advantage in the European market. Since then, the two sides have been engaged in talks to find other solutions.
How cheap is too cheap?
Under new guidelines published by the Commission last week, companies can commit to setting minimum prices for vehicles exported to the European Union in order to avoid the price surcharges. In addition, in the case of a corresponding offer, commitments to invest in the EU or to limit exports would be positively taken into account.
Such offers would be assessed objectively and fairly by the Commission, according to the new guidelines. A prerequisite for acceptance is that the measures eliminate the damaging effects of subsidies and have an effect equivalent to the tariffs.
The published document was “intended to provide guidance to Chinese exporters who may be considering submitting price undertaking offers for exports of battery electric vehicles to the EU, which are currently subject to countervailing duties,” Commission spokesman Olof Gill said.
He said that at present, the Commission has received one price undertaking offer, without specifying which company or for which model. He added that the Commission is ready to consider other proposals, provided that they “adequately address the unfair competitive advantage” and demonstrate that they are “feasible in practice”.
Leading German automotive expert Ferdinand Dudenhöffer, head of the private institute Center Automotive Research (CAR), was sceptical of the effects of the minimum prices could have on competition.
According to EU calculations, manufacturers in China benefit from unfair subsidies that give them a price advantage of around 20 percent on the European market. For this reason, tariffs ranging from 7.8 to 35.3 percent were imposed from 2024, depending on the manufacturer. German and US companies that manufacture in China are also affected. In retaliation, China imposed special tariffs on EU goods such as spirits, pork, and dairy products.
According to CAR, Chinese manufacturers sell their models in the EU at an average markup of 118 percent on top of the domestic price. “Given the current price level in Europe, there should still be significant scope for Chinese manufacturers to reduce prices,” said Dudenhöffer.
Pressure from all sides
According to the latest report by the EU research agency Eurofound, the automotive industry in the EU directly employs around 6 million workers and another 6 million in related sectors.
Since 2019, the pace of job losses in the sector has clearly accelerated. In 2024 alone and at the beginning of 2025, layoffs announced by European companies affected around 100,000 jobs.
The largest employment losses have been recorded in countries with a strong presence of Europe’s biggest car manufacturers. In France, a structural decline is feared, while since 2019 job cuts have also affected Germany, Italy, and, to a lesser extent, Spain. Central and Eastern European countries – Czechia, Hungary, Poland, Romania, and Slovakia – are facing the relocation of production outside the EU to countries with lower labor costs.
This is happening because sales of cars originating from China, including electric vehicles (EVs), are increasing in the EU. In practice, some of these cars on EU markets are not only models of Chinese brands but also vehicles produced in China for Western brands.
ARCHIVE – November 20, 2025, Saxony, Leipzig: A Volkswagen electric vehicle is charging at a charging station using a yellow cable. Photo: Jan Woitas/dpa
German auto angst
Germany, for many years a global carmaking powerhouse, is facing a dilemma. Demand for EVs is rising, but it is not just the battery powered Volkswagens or BMWs customers are flocking to – and the long-term outlook is dire.
Electric vehicle sales rebounded strongly in Germany in 2025, according to official data from early January this year, with Chinese manufacturers making inroads from a low base in the EU’s largest economy despite tariffs.
EV sales rose 43.2 percent last year to 545,142 in total, the KBA federal transport authority said, representing 19.1 percent of all new cars sold.
Chinese EV giant BYD – which last year overtook Elon Musk’s Tesla to become the worlds largest electric carmaker – saw its German sales rise over 700 percent to more than 23,000 cars, giving it 0.8 percent of the overall auto market.
“International vehicle manufacturers with affordable battery electric vehicles and plug-in hybrids have contributed disproportionately to growth in these segments,” said Imelda Labbé, head of the VDIK foreign carmakers’ lobby in Germany.
The rise in EV sales last year comes after a fall of almost 30 percent in 2024 following the withdrawal of government subsidies, and Germany’s electric car market is still smaller than optimists had hoped for. After the decline in the market in 2024, the government said in December it would introduce subsidies again.
Some motorists will be able to benefit from 5,000 Euro for the purchase of new EVs or hybrids so long as their components are largely made in Germany. But industry figures say that better charging infrastructure and cheaper power would be needed to really boost EVs and warned that the planned subsidy would have limited impact.
On the other hand, German carmakers have been reporting strong declines in vehicle sales in China. Volkswagen said in January its sales dropped by 8 percent in 2025 year-on-year, as it was facing intense competition on the Chinese market from local producers. Mercedes-Benz reported a 19 percent decline in sales for the year, while BMW sold 12,5 percent fewer cars in China.
German manufacturers like Mercedes or VW sell about 30 percent of their cars on the Chinese market.
The tug-of-war affects not just major players, but the automotive sector across the continent.
Bulgaria for example is not a major car producer, but it is increasingly important as a supplier of automotive components to European manufacturers. The sector has grown into one of the country’s strongest industrial branches, generating close to 11 billion Euro in annual turnover, according to business media and industry analyses.
This means that it is indirectly exposed to the EU-China trade dispute over electric vehicles: weaker competitiveness of European carmakers could reduce orders for Bulgarian suppliers, while a recovery in EV sales in core markets such as Germany would have the opposite effect.
At the same time, Chinese manufacturers are not only exporting cars to Europe but are also expanding production and partnerships within the EU, with Bulgaria being increasingly part of China’s automotive strategy in Southeast Europe according to analysts.
For Bulgaria, this creates a mixed impact: EU trade measures may protect European carmakers, but Chinese localization in Europe could also open new opportunities for Bulgarian suppliers.
Dudenhöffer expects the sector to shrink in the next years in Germany and Europe, as manufacturers shift their production to the US or Asia, he said in his market forecast for 2026.
“Growth is taking place in Asia, and Asian car manufacturers (Japan, Korea, China) are increasingly dominating the car business.”
Ferdinand Dudenhöffer, German Automotive Expert
Fading from Green to Petrol
And then there are of course the EU’s green policies: The EU in December rolled back a 2035 ban on new petrol and diesel cars seen as a milestone in the fight against climate change, as the bloc pivots to bolstering its crisis-hit auto sector.
Under proposals slammed by green groups as an act of “self-sabotage”, carmakers will have to cut exhaust emissions from new vehicles by 90 percent from 2021 levels – down from an envisaged 100 percent.
This means that in practice automakers will still be able to sell a limited number of polluting vehicles – from plug-in hybrids to diesel cars – beyond 2035, provided the resulting emissions are “compensated” in various ways.
The EU’s Industry Commissioner, Stéphane Séjourné, insisted the bloc’s green ambitions stood intact as he put forward a plan billed as a “lifeline” for Europe’s auto industry.
The combustion-engine ban was hailed as a major win in the climate fight and a key tool to drive investments in electrification when adopted in 2023.
The compromise plan was slammed by both environmentalists and industry groups.
While the EU had recognised that remaining open to different technologies was important, its proposal was “fraught with so many obstacles it threatens to remain ineffective in practice”, the president of the German Association of the Automotive Industry (VDA), Hildegard Müller, said. “In times of increasing international competition, in times when European economic power is crucial, this overall package from Brussels is disastrous.”
The future of German car manufacturers – and by extension automakers in other EU member states – is closely linked to the Chinese market.
According to Dudenhöffer, they must develop and build electric cars “in China for China”. In this context, he criticised the softening of the combustion engine phase-out. He said it was not possible to disconnect from developments, but that it is necessary to face competition in the tough Chinese market. “If you’re not in China, you’re not in the car business.”
This article is an ENR Key Story. The content is based on information published by ENR participating agencies.
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