Key Takeaways
- China's economy has demonstrated strong energy and resilience, with foreign trade showing particularly robust growth in July, including an 8% jump in exports and a 4.8% rise in imports, contributing to a 3.5% overall increase in goods trade for the first seven months of 2025 to 25.7 trillion yuan (approximately $3.6 trillion USD).
- The German Association of the Automotive Industry (VDA) is intensely lobbying for the removal of U.S. Section 232 tariffs on European cars, which have imposed a 15% tariff on automotive products and previously up to 25% on cars and 50% on steel, costing the German industry billions annually.
- The VDA is also urging the EU Commission and the German government to provide strong support and finalize promised agreements, including a call to weaken the EU's 2035 combustion engine ban and introduce exemptions for plug-in hybrids, citing slow electric vehicle (EV) sales and a lack of charging infrastructure.
- German automakers like Volkswagen (VWAGY), BMW (BMWYY), and Mercedes-Benz (MBGYY) face significant challenges from these tariffs, with estimates suggesting a 10-15% reduction in net income for U.S. exports due to the 25% car tariff.
China's Economy Demonstrates Robust Resilience and Growth
The Chinese economy is showcasing significant energy and resilience, maintaining stable and positive growth despite global uncertainties. Official data released on August 7, 2025, revealed that China's total goods imports and exports in yuan-denominated terms increased by 3.5% year-on-year in the first seven months of 2025, reaching 25.7 trillion yuan (approximately $3.6 trillion USD). This growth rate accelerated from 2.9% in the first half of the year.
July alone saw a particularly strong performance, with total goods trade rising 6.7% year-on-year to a new monthly record of 3.91 trillion yuan. Exports surged by 8%, while imports climbed 4.8%, marking the second consecutive month of import growth. Mechanical and electrical products were a primary driver of exports, accounting for approximately 60% of China's total, with notable gains in automatic data processing equipment, integrated circuits, and automobiles. Premier Li Qiang affirmed that the Chinese economy is fully capable of withstanding external shocks and achieving long-term stable growth.
German Automotive Industry Battles Tariffs and Regulatory Hurdles
The German automotive industry, represented by the VDA, is actively engaged in efforts to reshape trade and regulatory landscapes to bolster its competitiveness. A major focus is the call for the U.S. to suspend Section 232 tariffs and remove sectoral tariffs on European cars. While a recent U.S.-EU framework agreement averted further escalation of the trade dispute, a 15% U.S. tariff on automotive products continues to impose billions in annual costs on the German auto industry. Previously, tariffs on German automotive exports and steel had reached as high as 25% on cars and 50% on steel, significantly impacting profit margins for major German automakers like Volkswagen (VWAGY), BMW (BMWYY), and Mercedes-Benz (MBGYY). These tariffs have been estimated to reduce net income for U.S. exports by 10-15%. The VDA highlights the substantial presence of German companies in the U.S., employing 138,000 workers and producing over 900,000 vehicles annually, arguing that tariffs ultimately harm consumers on both sides of the Atlantic.
Concurrently, the VDA is urging the EU Commission and the German government for strong support and the swift implementation of relief measures. This includes a controversial push to weaken the EU's 2035 climate target and the ban on new combustion engine car sales, proposing exemptions for plug-in hybrids and incentives for low-carbon fuels. The industry cites slow electric vehicle (EV) sales and inadequate charging infrastructure as reasons for these adjustments. Beyond environmental regulations, the VDA has called for broader economic reforms in Germany, advocating for tax cuts, reduced bureaucracy, and investment premiums for climate protection and digitalization to enhance international competitiveness. Despite these challenges, German automotive companies plan to invest approximately €320 billion in research and development and €220 billion in capital expenditure from 2025 to 2029, with expectations for domestic electric car production to increase by 24% to 1.7 million units in 2025.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.