Excluding UK from ‘Made in Europe’ law will hurt entire EU car industry, Mercedes boss warns
{
"title": "Brussels' Industrial Paradox: 'Made in Europe' Act Risks Hurting Its Own Auto Sector",
"article": "The European Union’s ambitious Industrial Accelerator Act (IAA), intended to fortify its manufacturing base against external competition, faces a sharp rebuke from within its own ranks. Ola Källenius, head of Mercedes-Benz and president of the European Automobile Manufacturers’ Association (ACEA), has issued a stark warning: excluding the UK from the “Made in Europe” legislation would be a “deliberate choice” to “hurt” the car industry across the entire bloc. This isn't merely a business lament; it's an alarm bell for a policy potentially undermining its own stated objectives, just weeks before political leaders aim to finalize the act by December.\n\nAt its core, the IAA is designed to protect local industry, primarily targeting China, which currently enjoys a staggering £1bn a day trade surplus with the EU. Yet, Källenius argues that extending this protective barrier to exclude close allies like the UK, Norway, Turkey, and Switzerland would “weaken the industry on both sides,” making “no sense.” The legislation's stated goal is to “industrialise more in Europe” and “build local supply chains,” a vision that seems fundamentally at odds with severing established, integrated production networks with the UK.\n\nThis debate unfolds against a backdrop of existing post-Brexit trade friction. The ACEA is simultaneously lobbying for an urgent suspension of plans to introduce 10% tariffs on UK electric vehicles (EVs) imported to the EU, and vice versa. These tariffs, written into the post-Brexit Trade and Cooperation Agreement (TCA), are set to hit in less than three months, causing significant anxiety among manufacturers, as highlighted by ACEA’s international trade director, Jonathan O’Riordan. The TCA’s tariff schedule was designed to incentivize battery production in Europe, a component that can represent about 45% of a new car’s cost.\n\nAdding another layer of complexity, the EU urged the UK to align by imposing tariffs on imported Chinese vehicles, mirroring the bloc’s own 2024 introduction. This, the EU suggested, would bolster the UK’s case for inclusion in the “Made in Europe” framework. However, UK business secretary Jonathan Reynolds, on a recent trip to India, indicated that such tariffs were “not on the cards at the moment,” a stance that further complicates the UK’s quest for inclusion, despite lobbying efforts from figures like Andy Burnham and the UK Prime Minister's intent to raise the issue at the 20 November UK-EU summit.\n\nThe implications for the European automotive sector are profound. The current discussions around the IAA and the impending EV tariffs are not just about trade policy; they are about the fundamental structure of the industry's supply chains and its global competitiveness. Fragmenting production across the Channel, where components and finished vehicles flow freely today under tariff-free conditions (if "mainly made in Europe"), risks adding prohibitive costs and bureaucratic hurdles. This signals a European pivot towards a more protectionist industrial policy, ostensibly to foster regional resilience, but at the potential expense of efficiency and established market access for manufacturers already operating in a deeply integrated ecosystem.\n\nUltimately, the EU's dilemma is one of unintended consequences: an act designed to bolster European industry against distant rivals risks delivering a self-inflicted wound by alienating its closest partners. The rhetoric of strengthening local supply chains, while admirable in theory, must contend with the realities of an industry built on decades of cross-border collaboration. To deliberately worsen the competitiveness of its own industry, as Källenius contends, would be a peculiar form of industrial acceleration indeed.",
"tweet": "Brussels' 'Made in Europe' Act, meant to fortify EU auto industry, could boomerang. Mercedes boss Källenius warns excluding UK is a \"deliberate choice\" to \"hurt\" the bloc. Protectionism aimed at China might just cripple its own allies. Talk about accelerating backwards. #EUTariffs #CarIndustry",
"excerpt": "The EU's 'Made in Europe' Act, designed to protect its car industry, faces a stark warning from Mercedes-Benz head Ola Källenius. Excluding the UK, he argues, would be a \"deliberate choice\" to \"hurt\" the entire bloc, ironically weakening the very industry it seeks to fortify against external competition like China, amidst ongoing post-Brexit trade tensions and impending EV tariffs. This deep dive explores the paradox of a policy that could undermine its own objectives.",
"keywords": "EU, UK, automotive industry, trade, tariffs, Made in Europe, Industrial Accelerator Act, Brexit, Mercedes-Benz, ACEA, supply chains, protectionism, electric vehicles"
}