US tariffs threaten German car exports amidst industry slump
President of the German Automotive Industry Association (VDA), Hildegard Müller, described the US decision to impose tariffs on cars as "a fatal signal for free, rules-based trade." The decision affects a key export market for German manufacturers at a time when they are grappling with declining profits.
On Wednesday, President Donald Trump announced the introduction of 25% tariffs on cars from outside the USA. The German automotive industry is expressing significant concern in response to this decision. The United States remains a crucial sales market for the German automotive industry. Nearly every third Porsche and every sixth BMW sold in 2024 were destined for the North American market. For Volkswagen, Audi and Mercedes, this share ranged between 12% and 15%.
No other economy imported as many new cars from Germany in 2024 as the USA. The American market accounted for 13.1% of all German car exports, surpassing the United Kingdom (11.3%) and France (7.4%). According to VDA data, exports to the USA increased compared to the previous year.
The decision to introduce tariffs comes at an exceptionally inopportune moment for German companies. Volkswagen and Porsche's profits fell by 30%, and BMW recorded an even larger decline, by as much as 37%. It is worth noting that, so far, tariffs on car imports from the EU to the USA were 2.5%, while the EU imposed a 10% tariff on American cars.
Consequences for both sides of the Atlantic
Hildegard Müller, president of the German Automotive Industry Association (VDA), emphasises in an interview with Bild.de that the new tariffs will have a negative impact not only on European manufacturers but also on the American economy.
— The announcement of high tariffs on cars and car parts is bad news for German carmakers, for the German economy, for the EU, but also for the US, — she said in an interview with the newspaper. The current customs policy of the US President has also attracted criticism among American entrepreneurs.
The VDA president highlights that the transatlantic partnership and free and fair trade are of great economic importance to both sides and are a guarantor of growth, prosperity and jobs on both sides of the Atlantic. The association calls for immediate negotiations between the USA and the EU regarding a bilateral agreement.
European Commission President Ursula von der Leyen expressed deep regret over the American decision to impose tariffs on European car exports. She assured, at the same time, that the EU would continue to seek a solution through negotiations.
The introduction of 25% tariffs represents a burden both for companies and for the closely interconnected global supply chains in the automotive industry. Müller predicts that the negative effects will be felt primarily by consumers, also in North America.
