EU car industry feels relief and pain from US trade deal
European Automakers Hit by US Tariff Deal
Shares in Germany’s carmakers slumped Monday after the EU‑US trade agreement was announced. Porsche, Volkswagen, BMW and Mercedes‑Benz all fell more than three percent.
Deal Offers Relief but Keeps Tariff Pain
The European Automobile Manufacturers’ Association (ACEA) welcomed the deal as a “principle” step, but warned that the 15 % US tariffs on EU goods—cars included—will continue to hurt both sides.
German Economy Faces “Substantial Damage”
Chancellor Friedrich Merz said Europe’s biggest economy would suffer major losses from the agreed tariffs, yet he added that no further gains were expected.
US Market Critical to European Exporters
- Europe sent nearly 750,000 cars to the U.S. last year, a quarter of all sector exports.
- 15 % is lower than Trump’s 27.5 % rate announced in April, but far above the 2.5 % pre‑Trump tariff.
- Analyst Stefan Bratzel estimated that two‑thirds of the tariff‑induced price rise would be borne by U.S. consumers, while exporters would shoulder the remaining third.
Tariff Cost for German Carmakers
Hildegard Mueller, head of Germany’s VDA, said the 15 % rate would cost firms “billions each year.” The burden forced all automakers to lower 2025 profit forecasts and search for cost‑cutting elsewhere.
Possible Countermeasures
- BMW’s Oliver Zipse suggested eliminating European tariffs on U.S. vehicle imports.
- Mercedes‑Benz is lobbying for national or EU‑level support.
- Volkswagen noted a 1.3 billion‑euro hit to first‑quarter results from Mexican‑made vehicles destined for the U.S. market.
- Volvo Cars, owned by China’s Geely, announced steep second‑quarter losses because of tariffs.
Industry Lobbies for Policy Relief
European automakers now lobby the European Commission to delay the timetable for a fully electric auto market and to provide some industry stimulus. Without help, production could be cut, affecting up to 70,000 jobs in Germany, said Ferdinand Dudenhoeffer of the Center for Automotive Research.
