German auto titans on edge as Trump considers imposing tariffs

President-elect Donald Trump has raised concerns in the global auto industry with his pledge to impose a blanket tariff on all goods coming into the U.S. This move could potentially have a significant impact on European carmakers, particularly those in Germany, which is already facing challenges in its automotive sector.
During his campaign trail in late September, Trump declared his intention to transform Germany’s auto giants into American car firms, stating that he wants them to build their plants in the U.S. He emphasized his favorable view of tariffs, calling it one of the most beautiful words he has ever heard.
The President-elect has also revealed plans to introduce new tariffs on China, Canada, and Mexico, including an additional 10% tariff on all Chinese products and a 25% tariff on goods from Canada and Mexico. While Europe was not initially mentioned in Trump’s tariff announcement, EU policymakers are concerned that the bloc’s auto sector could be targeted in the future.
Germany’s top OEMs, including Volkswagen, Mercedes-Benz Group, and BMW, have already issued profit warnings due to economic weakness and sluggish demand in China. Germany is the largest exporter of passenger cars to the U.S. in Europe, accounting for 15% of the country’s total exports to the U.S.
Rico Luman, a senior sector economist at ING, highlighted the vulnerability of Germany’s auto sector to Trump’s tariff threats, warning that it could worsen the current situation. Industry experts like Michael Robinet from S&P Global Mobility also expressed concerns about the potential impact of additional U.S. tariffs on the global auto industry.
While Volkswagen and Mercedes-Benz have expressed their readiness for constructive dialogue with the new administration, BMW has chosen not to comment on Trump’s tariff threats. The shares of these German automakers have seen significant declines year-to-date.
Julia Poliscanova from Transport & Environment urged Europe to stay on course with its clean tech and electric vehicle agenda, emphasizing the need to accelerate these efforts despite the challenges posed by Trump’s tariff plans. She believes that while the short-term outlook may be negative for German carmakers, it is crucial for Europe to prioritize its industrial interests and continue advancing in clean technology and electric vehicles.
As the auto industry braces for potential disruptions from Trump’s trade policies, stakeholders are closely monitoring the developments and preparing for the impact on both the industry and consumers. The future implications of these tariffs remain uncertain, but the industry is expected to navigate through the challenges and adapt to the changing landscape.