The Institute of the German Economy in Cologne has advised the federal government to introduce so-called countervailing duties against the Chinese economic power. “We need tariffs to compensate for unfair competition that China practices with great unscrupulousness,” said IW trade expert Jürgen Matthes Editorial Network Germany (RND). The expert emphasizes the distinction between punitive and countervailing duties.
“Tariffs are not always necessarily protectionist, even if we were raised to think that way in Germany,” said Matthes, who heads the cluster for international economic policy at the German Economic Institute. In contrast to punitive tariffs Countervailing duties would be “applied practically precisely” if subsidies were granted in a third country such as China lead to price differences between domestic and foreign products.
Punitive tariffs, however, are flat-rate additional tariffs that serve to deter and sanction a trading partner. With the start of his second term in office, US President Donald Trump imposed punitive tariffs on numerous countries, including China and the EU. At the end of February he had The US Supreme Court has blocked most of the special tariffs introduced by Trump so far declared unlawful.
“We need these tariffs quickly”
In its economic policy aimed at dominance, the Chinese state does not take debt brakes or the like into account, said Matthes. Germany’s market economy approach is correct. In order to maintain this, countervailing duties are needed. “And we need these tariffs quickly,” demanded the expert.
The raising of the Customs duties According to Matthes, “it’s not a big problem.” There are long-established procedures. All that needs to be determined for different sectors and product ranges is how high the proportion of unfair competition caused by subsidies and currency undervaluation is. According to the expert, countervailing duties can only be imposed where there is one “significant own production” without subsidies is future-proof – for example in mechanical engineering.