US tariffs on EU cars: Billions at risk

Why US tariffs on EU cars will hit Germany especially hard

A sharp escalation in transatlantic trade is looming in the coming week: US President Donald Trump has announced that he will raise US tariffs on EU cars and trucks from 15 to 25%. This is likely to particularly affect German carmakers, whose export business with the US is of considerable importance for the industry.

The European Union and business representatives sharply criticized the announcement. The European Commission is reserving the right to take countermeasures if Trump actually implements his tariff plans. As communications and statements indicate, the main question is whether the announced measures are compatible with the trade agreement concluded between the EU and the US.

The Federal Ministry for Economic Affairs stated that the German government had taken note of the US president’s announcement. The federal government is in close contact with the European Commission, which is conducting the talks with the US side in connection with the tariff agreement. "We will coordinate closely within the EU on the next steps," it said.

How politics and industry are responding to Trump’s tariff plans

Bernd Lange, chair of the trade committee in the European Parliament, called Trump’s announcement unacceptable. The German Association of the Automotive Industry also reacted strongly. The VDA described the move as "a renewed and serious strain on transatlantic relations."

On Friday, Trump declared on the platform Truth Social that he wanted to raise tariffs on cars and trucks from the EU from 15 to 25% as of next week. He justified this by claiming that the EU is not adhering to the agreed trade deal.

VDA president Hildegard Müller emphasized: "The trade agreement that was concluded between the EU and the US must be respected by both sides." Brussels must "finally" implement the arrangements. The additional charges would hit the German and European automotive industry hard in an already tense situation. At the same time, they could have an impact on consumers in the US. The auto industry is calling on Washington and Brussels to deescalate and to enter into swift talks.

What risks economists see for the German economy

The president of the Ifo Institute, Clemens Fuest, warned of significant consequences if the EU were to impose tariffs on US products in return. Fuest told the newspaper "Bild": "If this turns into a new trade war, Germany faces a recession in 2026."

Jens Südekum, an adviser at the Federal Ministry of Finance, initially recommended waiting. It must be examined whether the announced US tariffs will actually be imposed. In that case, he advocated "appropriate countermeasures" by the EU.

The president of the German Institute for Economic Research, Marcel Fratzscher, on the other hand, called for a tough counter-reaction. "Trump is currently weak domestically, so now at the latest is the time to use counter-tariffs and in particular the taxation of US tech companies to offset disadvantages and put ourselves in a better negotiating position," Fratzscher told the Handelsblatt newspaper.

US tariffs on EU cars could trigger billions in additional costs

The announced tariffs of 25% on new cars from the EU could lead to additional costs of around 2.5 billion euros per year for car production in Germany. This is the result of calculations by the Center Automotive Research in Bochum.

CAR director Ferdinand Dudenhöffer clearly sees Germany as the focus of the new tariff threat. "Since exports by foreign carmakers to the US are insignificant, the new Trump tariff threats can also be interpreted as the start of an economic war against Germany," he emphasized.

This once again puts the German automotive industry at the center of a trade policy conflict. According to the industry’s assessment, the additional duties are hitting European manufacturers at an already tense time. At the same time, higher import costs could also be felt in the US market.

What the EU Commission is considering as a response

A spokesperson for the EU Commission said that if the United States were to take measures that contradict the joint trade agreement, it was keeping "all options on the table to protect the interests of the EU." The spokesperson emphasized that the EU is implementing its commitments in line with standard legislative practice and is keeping the U.S. government fully informed.

Bernd Lange also pointed to the ongoing implementation of the agreement. The European Parliament continues to stand by the deal and is working on its implementation. "While the EU is fulfilling its commitments, the U.S. side keeps breaking its promises," he wrote on the platform X.

The Federation of German Industries said: "The American side is damaging mutual trust with ever new provocations." The trade agreement between the EU and the United States must be respected by both sides. At the same time, the BDI stressed: "European legislation and trade policy are developed through transparent, rule-of-law procedures, and it is inappropriate to exert pressure on this by imposing unannounced punitive measures on key industries."

Why the trade agreement is under pressure

Last summer, Trump and European Commission President Ursula von der Leyen agreed in a framework deal on an upper limit of 15% for most EU imports of goods into the United States. This rate was also to apply to European cars and car parts. In return, the EU committed to scrapping tariffs on U.S. industrial goods and easing market access for U.S. agricultural products such as pork and dairy products.

Implementation of the tariff deal was, however, slowed by uncertainty following a court ruling that had declared many U.S. tariffs unlawful. In March, the European Parliament announced that it intended to tie further implementation of the agreement with the United States to strict conditions. For the deal to take full effect, the member states must also approve the corresponding regulations.

Simon Evenett, a trade expert at the private business school IMD Business School, told the British broadcaster BBC: "Those who believe that this (U.S.) administration does not stick to any agreement will feel vindicated." At the same time, he pointed out that social media posts are not law.

The role of production in the United States

Cars and trucks from EU manufacturers that are produced in the United States are, according to Trump, exempt from the duties. The U.S. president wants to use this to push carmakers worldwide to increase production in the United States, despite higher manufacturing costs.

This worsens the strategic situation for European manufacturers. The announced tariffs not only put pressure on exports from the EU, but also increase political pressure on production decisions. As a result, the conflict directly touches on questions of location strategy, value creation and international supply structures.

Relations between the United States and European countries have recently been tense. The U.S. president has criticized what he sees as the Europeans’ lack of support in the war against Iran. In recent days, Trump has also repeatedly launched verbal attacks on Chancellor Friedrich Merz after Merz voiced criticism of the U.S. offensive against Iran.

With material from dpa