German carmakers brace for potential tariff hike in USA

The German automotive industry is facing a crisis, largely due to insufficient demand for electric cars. Volkswagen's weakening position in China's key market worsens the situation, and the future prospects are not encouraging, especially amidst the ongoing trade war between the EU and China. Unfortunately, much indicates that this is not the end of the problems for German brands, which expect another blow—this time from the USA.

Although Donald Trump's presidency is still a few months away, analysts and experts are already predicting the potential impact of his decisions on the global economy. If the proposals made during his campaign are realized, European brands stand to lose a lot.

This is primarily due to the higher tariff rates on vehicles imported from Europe to the USA. The Trump administration may raise tariffs from the current 2.5% to 12.5%. According to analysts at Stifel Europe Bank, German manufacturers could lose up to 15% of their profits.

The German daily "Handelsblatt" reported that German brands export nearly 600,000 cars annually from European factories and 350,000 cars from Mexican factories to the USA. For products from Mexico, tariffs may be even higher.

However, it's worth noting that not all German manufacturers are equally threatened. BMW is in a good position, as it has many factories in the USA. The same goes for Mercedes and Volkswagen. Nonetheless, many models from these brands are still imported.

Higher tariffs may impact Porsche the most since all of its cars sold in the USA are imported from Europe. Audi will also find itself in an unfavorable position, as the Q5 model—a sales hit in the USA—is produced in Mexico.

As noted by "Handelsblatt," the threat from the USA came at the worst possible time. For years, America and China were the largest export markets for German brands, and now, as sales in China decline, the last thing manufacturers from our western neighbor need are problems in the USA.