Trump’s auto tariffs hit European luxury brands hard

The U.S. president announced on Wednesday that he will impose a 25% tariff on cars imported into the United States. According to some analysts, this will significantly affect producers from Europe.

Donald Trump's proposed 25% tariffs on cars will particularly hurt luxury brands like Audi, Porsche, and Ferrari, whose vehicles are entirely imported into the USA, calculates Walter Bloomberg in his analysis posted on X. BMW and Mercedes, for whom the American market represents about 25% of sales, will also feel the consequences. Even though about half of their cars sold in the USA are assembled locally, key parts are still imported.

Stellantis, which derives half of its revenue from the USA and produces about 60% of the vehicles sold locally, will be vulnerable to a drop in demand. Volkswagen, for which the USA represents a few percentage points of sales, is in a better position thanks to sourcing most parts in North America. Renault remains without any exposure to the American market.

European stock markets are reacting with sharp declines. Automotive companies are losing more than 5% of their value, and German and French stock indexes are experiencing significant drops.

On the Frankfurt stock exchange, Mercedes-Benz is losing as much as 5.53%, reaching 54.82 euros per share. This company may be one of the most brutal hits, as analysts say only half of the brand's cars sold in the USA are assembled locally, while key parts are still imported.

Porsche is experiencing similar losses, with its shares dropping by 5.34% to 47.33 euros. The situation for this brand is even more challenging – according to experts, all Porsche models sold in the USA are entirely imported from Europe.

Other German automotive companies are also under intense selling pressure. BMW recorded a decline of 4.61%, and Volkswagen shares lost 3.68% of their value. In the case of Volkswagen, analysts point out that the USA represents a small percentage of its global sales, and the company already sources most of its parts in North America.

In Paris, Stellantis, the owner of brands like Peugeot, Citroen, and Fiat, is taking the most brutal hit, with its shares dropping by 5.56%. According to analysts, Stellantis generates about half its revenue in the American market, and about 60% of the vehicles sold in the USA are assembled locally. However, the company remains very sensitive to a drop in demand.

The German DAX index, in which automotive companies have a significant share, lost 1.44%, falling to 22,518.45 points. The French CAC 40 also declined 0.93%, reaching 7,956.20 points.

President Trump announced on Wednesday that he would impose a 25% tariff on all cars imported from abroad. The previous rate was just 2.5%. This tenfold increase dramatically changes the economics of car exports to the USA.

During the announcement in the Oval Office, the president emphasized: "We'll effectively be charging a 25% tariff. But if you build your car in the United States, there is no tariff."

Trump signed an executive order that he claims will increase car production in the USA. The decision is intended to encourage foreign companies to relocate production to the United States.

According to estimates from the American administration, the new tariffs are expected to add an additional $100 billion to the U.S. budget. The president's strategy is to strengthen the American automotive industry and protect domestic jobs.

However, market experts indicate that the decision could be a double-edged sword. Higher prices for imported cars may affect American consumers and limit the availability of specific models on the market, potentially leading to a rise in prices of locally produced vehicles.