Germany Seeks New European Union Tariffs on Chinese Hybrid Cars

2026-09-15 global

Berlin, Tuesday, 15 September 2026.
In a major policy shift, Germany is preparing proposals for new European Union tariffs on Chinese plug-in hybrids after Chinese brands captured a record third of European registrations.

Proposed Economic Security Package

The German government, led by Chancellor Friedrich Merz, is developing a comprehensive security package targeting Chinese strategic industries, with cabinet approval targeted for October 14, 2026 [1]. This planned initiative marks a significant policy shift, potentially including new tariffs on imported hybrid electric vehicles and mandatory joint ventures for Chinese companies operating within the bloc [1][2]. Berlin is actively collaborating with Paris to finalize a joint position paper intended to build European Union-wide support ahead of an October 2026 summit in Brussels [1][2]. The proposal also encompasses tightened investment and export screening, reflecting a broader strategy to protect key European strategic industries from foreign competition [1]. Officials indicate that the strategy includes requirements for some Chinese companies to establish operations in Europe under European majority control [1]. This move represents a departure from previous stances, with Chancellor Merz stating that Europe previously underestimated China’s power and economic strength [1].

Trade Imbalances Drive Policy

Economic data underscores the urgency behind Berlin’s proposed measures, as German exports to China fell 9.7% to €81.3 billion in 2025 [1][2]. Conversely, imports from China rose 8.8% to €170.6 billion during the same period, contributing to an EU daily trade deficit with China that currently exceeds €1 billion [1][2]. In the first half of 2026, Germany’s trade deficit with China reached approximately €55 billion, compared to roughly €40 billion in the first half of 2025 [7]. This represents a 37.5 increase in the trade deficit over the period [7]. Additionally, Chinese brands accounted for a record one-third of all new plug-in hybrid registrations in Europe in July 2026, according to Dataforce figures [1][2]. Vice Chancellor and Finance Minister Lars Klingbeil has publicly suggested extending EU tariffs to China-made plug-in hybrids to address these imbalances [1]. The European Commission has issued a deadline of early October 2026 for Beijing to present initial steps to address the trade imbalance [7].

Corporate Investment Trends

Despite political tensions, German corporate investment in China remains robust, creating a complex dynamic for policymakers. German companies invested an additional €5.6 billion in China in the first half of 2026, which is up about one-third from the same period a year earlier [5][7]. In contrast, German firms’ investment in the United States fell 65% year on year to about €4.3 billion in the first half of this year [5]. A study by the German Economic Institute suggests firms feel compelled to keep investing in China to remain globally competitive amidst fierce price competition [5]. Furthermore, a German Chambers of Commerce and Industry survey revealed 55% of companies support stronger EU measures against unfair Chinese competition [7]. However, large German firms are simultaneously shifting production locally to China to bypass customs costs and improve delivery times [7]. This dual strategy suggests that by the end of 2027, German companies are likely to be more deeply rooted in China even as trade barriers rise [7].

Timeline and Next Steps

The path forward involves critical deadlines, with the German cabinet approval for the security package targeted for October 14, 2026 [1]. Following this, scheduled talks with Beijing are set to occur later in October 2026 [1][2]. In the telecommunications sector, Germany has mandated that operators remove Huawei and ZTE critical components from 5G core networks by 31 December 2026 [1]. Critical functions in access and transport networks must be replaced by 31 December 2029 [1]. Meanwhile, Chinese Foreign Minister Wang Yi warned that protectionist policies would raise inflation and slow Europe’s green transition during a September 14 phone call with his French counterpart [2]. Beijing has criticized the EU’s proposed Industrial Accelerator Act, arguing provisions would create investment barriers [2]. The distinction remains between Germany endorsing existing Commission measures and initiating new ones, with the latter marking a genuine policy shift [4].

Sources

Economic Security Vehicle Tariffs