Merz admits 'Made in Europe' car subsidy plan rattled South Korea and Japan

German Chancellor Friedrich Merz said he was caught off-guard by the force of Asian objections to a proposed "Made in Europe" rule that would limit EU car subsidies to vehicles built inside the EU, Switzerland and the United Kingdom.

The plan, agreed between Merz and French President Emmanuel Macron, drew protests in South Korea and Japan during Merz's five-day East Asian tour. South Korean President Lee Jae Myung told reporters he had asked Merz to treat Korea on the same terms as EU member states. Japan raised a similar complaint.

Merz told reporters before returning on Friday evening that "that was a topic that surprised me" given the intensity with which Asian nations had presented their objections. He acknowledged the Franco-German proposal had sparked concern in Singapore, Japan and Korea that Europe was heading toward a new wave of protectionism.

Merz vowed to take the complaints "very seriously" and to raise them at the next EU leaders' summit, an informal gathering set for Dublin on November 13.

In speeches in Seoul and Tokyo, Merz proposed a "global political alliance for rules-based trade" drawing in the EU, Asian nations, Canada, Australia, New Zealand and the South American Mercosur bloc — framed as a coordinated response to Chinese pressure on rare earth metals and tariff threats from US President Donald Trump. The Asian pushback over car subsidies, however, exposed how industry-specific frictions can cut across that broader alignment.