On October 8, 2024, Germany's Chancellor Olaf Scholz's rejection of European Union (EU) tariffs on Chinese electric vehicles has failed to prevent other EU member states from voting in favor of them, revealing a divided Berlin struggling to lead EU policy, according to Reuters.
Germany was one of five EU member states that opposed the tariffs after months of pressure from its automobile manufacturers, who rely on China for nearly a third of their sales, allowing the European Commission to proceed with anti-subsidy tariffs until the end of the month.
The contrast to a decade ago is stark. In July 2013, a flurry of phone calls between China, then-German Chancellor Angela Merkel, and then-European Commission President Jose Manuel Barroso thwarted a proposal for EU tariffs on solar panels, resulting instead in a minimum pricing agreement.
After 16 years under Merkel's leadership, during which the German industry flourished and she maintained unity within the EU, a three-party coalition now oversees an economy in its second year of contraction, prioritizing domestic policy over EU matters ahead of the federal elections in 2025.
In Brussels, there is exasperation among diplomats regarding the internal struggles within Germany's three-party coalition, which they say undermines the influence of Europe’s largest economy and the unity of the EU.
Brussels has committed to continue exploring a compromise on electric vehicles with Beijing, but Germany's rejection has weakened its negotiating power.
Analysts from Eurointelligence noted, "This division between Germany and the rest of the EU compromises an important part of the Commission's initiative: demonstrating a united front against external pressures on individual countries."
Highlighting Germany's internal division, a senior source at the Foreign Ministry, led by the Green Party, stated that the EU should prevent Beijing from using unfair methods that harm the market and should not remove tariffs from the table.
The Federation of German Industries (BDI) adopted a nuanced position, stating that discussions should continue but that trade protection should be supported if conditions are met. "Close economic relations with the hybrid economy controlled by the party-state of China are associated with economic and geopolitical risks," the statement read.
This is not the first time a divided Germany has been at odds with its EU peers in recent months. In March, the bloc supported a law requiring companies to audit their supply chains, despite strong opposition from Germany's pro-business Free Democrats and Germany's abstention.
The German government's opposition to Italian bank UniCredit's offer for a partnership with Commerzbank has led to frustration among decision-makers at the European Central Bank, which will have the final say. They emphasized Germany's stated support for creating an EU banking union, which likely requires that cross-border bank mergers be effective.
One area where Scholz has found an ally is Hungary, often isolated, whose Prime Minister Viktor Orban described the EU tariffs on Chinese electric vehicles as "a huge blow" to the European economy and the German auto sector. "Germany and the European industry can no longer convince the Commission to be reasonable. But then, who can?" Orban wrote on X.
However, Orban is more of a master of obstruction than of leading EU policy and is certainly not the kind of champion of EU unity that Berlin has been.
Zach Meyers, deputy director at the Centre for European Reform, stated that the tariff dispute has shown that Germany no longer leads EU trade policy and that France's influence has been further limited after Commission President Ursula von der Leyen dismissed French Commissioner Thierry Breton and granted less influence to his successor.
While seeking closer ties with the United States and reducing risks from China, the case of electric vehicles suggests that without firm Franco-German guidance, the EU may continue sector by sector and follow international trade rules to secure EU support.
Noah Barkin, a senior advisor at the Rhodium Group, stated that despite its victory regarding tariffs, the European Commission would struggle to adopt a coherent and more skeptical policy towards China without Berlin's support. "As long as narrow, short-term priorities take precedence in Berlin, it will be a struggle for the Commission to continue with its new foreign policy agenda," he said.