US tariffs on German cars threaten industry profits and trade ties
The president of the German Automotive Industry Association (VDA), Hildegard Müller, described the U.S. decision to impose car tariffs as "disastrous for free trade." This decision impacts a crucial export market for German manufacturers, who are already struggling with declining profits.
On Wednesday, President Donald Trump announced introducing 25 percent tariffs on cars outside the United States. The German automotive industry is sounding the alarm in response to this decision, as the United States is the most important sales market for the German automotive industry. In 2024, almost every third Porsche and every sixth BMW sold went to the North American market. This share ranged between 12 and 15 percent for Volkswagen, Audi, and Mercedes.
No other economy imported as many new cars from Germany in 2024 as the U.S. The American market accounted for 13.1 percent of all German car exports, surpassing the United Kingdom (11.3 percent) and France (7.4 percent). According to VDA data, exports to the U.S. increased compared to the previous year.
The decision to introduce tariffs comes at an exceptionally unfavorable time for German companies. Volkswagen and Porsche's profits fell by 30 percent, while BMW recorded an even more significant decline of 37 percent. It is worth noting that, so far, tariffs on car imports from the EU to the U.S. were 2.5 percent, while the EU imposed a 10 percent tariff on American cars.
Consequences for both sides of the Atlantic
Hildegard Müller emphasizes in an interview with Bild.de that the new tariffs will negatively impact European manufacturers and the American economy.
"The consequences will cause a loss of growth and prosperity on both sides," she said in an interview with the newspaper. The current customs policy of the U.S. president has also faced criticism from American entrepreneurs.
The VDA president points out that transatlantic partnership and free and fair trade are of great economic importance to both sides and guarantee growth, prosperity, and jobs on both sides of the Atlantic. The association calls for immediate negotiations regarding a bilateral agreement between the U.S. and the EU.
European Commission President Ursula von der Leyen deeply regretted the American decision to impose tariffs on European car exports. At the same time, she assured that the EU would continue to seek a solution through negotiations.
Introducing 25 percent tariffs burdens companies and the automotive industry's closely interconnected global supply chains. Müller predicts that consumers, including those in North America, will feel the adverse effects.
