Stefan Scherer, CEO of AMG Lithium, has raised alarms about the European Union's heavy reliance on Chinese raw materials, warning that this dependency could reduce Europe to the status of 'a province of China.'

Currently, the EU depends on China for around 60% of the world's lithium and a significant share of battery component production, which poses a serious threat to its industrial base.

Despite European Commission President Ursula von der Leyen's efforts to reduce this dependency, the market remains inundated with cheaper Chinese imports, impacting various sectors including steel and battery units.

Scherer criticized the EU's Critical Raw Materials Act 2024 for failing to impose local sourcing responsibilities on manufacturers, contrasting it with the US's local content policy.

To bolster European manufacturers against state-backed Chinese rivals, Scherer suggested implementing temporary tariffs or tax incentives, akin to the US's Inflation Reduction Act.

He warned that without these temporary protections, the EU will struggle to compete with cheaper Chinese alternatives, jeopardizing the bloc's climate goals.

The German Economic Institute has projected that Germany could face losses of up to €200 billion ($236 billion) by 2028 if proposed US tariffs are fully enacted.

Scherer also pointed out that high energy costs in Germany, which are 37% above the EU average, represent a significant burden on its industrial sector, particularly steel.

He emphasized the need for an environment that encourages Western companies to safeguard investments in critical technologies, especially as the auto industry transitions to greener alternatives.

While von der Leyen has expressed intentions to promote domestic production, Scherer criticized current policies as ineffective in achieving this goal.

Negotiations between Brussels and Washington regarding proposed tariffs are ongoing, with a deadline of July 9, 2025, looming, which could significantly affect EU imports.

Scherer reiterated that without temporary protections, Europe risks falling behind in key technologies, particularly in electric vehicle battery production.