Germany Plans Economic Security Package Targeting China, May Expand Tariffs and Lobby EU
nashnova research
Germany is drafting a sweeping economic-security package targeting China — potentially covering new tariffs, forced joint ventures, and tighter export controls — with a cabinet submission planned for October 14 and a push for EU-wide backing, marking a landmark shift from cautious engagement to systematic defense.
What exactly is Germany planning?
According to Bloomberg, German ministries are mapping vulnerabilities in the country's China dependence. Options on the table: new tariffs, mandatory joint-venture requirements, tighter investment screening, and stricter export controls.
The sharpest measure: new tariffs on Chinese-made plug-in hybrid vehicles. This means → the tariff net would expand beyond pure EVs to hybrids, closing the channel Chinese automakers have used to sidestep existing duties.
Chancellor Friedrich Merz's government plans to submit the package to the cabinet on October 14, then seek broader EU endorsement.
Why now? What do the trade numbers show?
German exports to China fell 9.7% to €81.3 billion in 2025, while imports from China rose 8.8% to €170.6 billion — the deficit is widening fast.
In plain terms = Germany is selling less to China and buying more from it, and the gap has grown too large to sustain politically.
The EU's trade deficit with China now exceeds €1 billion per day (~$1.2 billion). German industry remains sluggish; Volkswagen has expanded its global job cuts to 100,000 — domestic economic pain is the direct catalyst for this policy pivot.
Why are Chinese hybrids in the crosshairs?
Data firm Dataforce reports that in July, a record one-third of plug-in hybrids registered in Europe came from Chinese brands, including Chery's Jaecoo line.
The Middle East conflict has pushed up oil prices and squeezed European household budgets, giving competitively priced Chinese hybrid models an edge with consumers.
This reflects a broader trend: Chinese automakers are expanding from pure EVs into hybrids, while existing EU tariffs mainly target battery-electric vehicles — hybrids are a policy gap, and Germany wants to close it.
How are Germany and France lobbying the EU?
Berlin is coordinating with Paris to rally other member states before the October Brussels summit. The two are drafting a joint position paper to submit to the EU as the basis for bloc-wide measures.
Vice-Chancellor Lars Klingbeil has publicly outlined three directions: extending tariffs to hybrids, requiring Chinese firms to set up European-majority joint ventures in Europe, and adopting a "Buy European" procurement preference.
Merz has accused China of artificially depressing the yuan, claiming it is undervalued by 25–30%. This means → Germany is pulling the currency issue into its trade-negotiation leverage as well.
What other hard measures are on the table?
Export controls: officials are considering tightening restrictions on advanced AI technology and semiconductor manufacturing equipment, citing concerns that China diverts some products to military use — products not currently covered by dual-use controls (regulations governing items with both civilian and military applications).
Inbound investment screening: the plan would add "economic resilience" and "strategic dependence" as grounds for blocking acquisitions. In plain terms = today the government can only block a deal on "security" grounds; under the new framework, "this purchase would make us too dependent on you" would also be a valid reason.
Outbound investment screening: some officials want the power to review or restrict German investment in sensitive Chinese sectors, but this may face resistance from free-market members within Merz's own CDU party.
Can the package actually land? Where is the uncertainty?
Sources stress that the measures have not yet been consolidated into a single draft, and cabinet consensus is far from assured.
Two major variables: domestically, free-market factions within the CDU oppose heavy-handed controls on outbound investment; at the EU level, securing enough member-state support remains an open question.
This reflects Germany's core policy dilemma: an export-driven economy that needs to protect domestic industry without fully alienating one of its largest trading partners — how far Berlin can go depends on the outcome of the Brussels summit negotiations.
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