Chinese imports and soaring aluminum prices squeeze EU manufacturers and global auto industry

The European Central Bank’s latest Economic Bulletin notes that Chinese industrial imports are expanding in advanced sectors such as electronics and automotive, lowering input costs but intensifying competition for Euro‑area producers. Since 2020, EU manufacturers have lost market share to Chinese rivals, creating short‑term disinflationary pressure while raising long‑term concerns about production off‑shoring and strategic vulnerabilities.

At the same time, the global automotive sector faces a raw‑material cost crisis. Record‑high aluminium prices—up more than 20 % in Japan since February—and spikes in plastics, rubber and steel, driven by Middle‑East geopolitical tensions, are pushing vehicle production costs higher. Analysts estimate that new car prices could rise by $600‑$1,000, affecting both conventional models and electric vehicles that rely heavily on lightweight aluminium. The combined effect of cheaper Chinese imports and escalating material costs is tightening profit margins and prompting manufacturers to rethink supply‑chain and sourcing strategies worldwide.