Trump’s
Tariffs on Autos Would Hit Europe Hard
The levies
could hurt European automakers when the industry is already struggling,
especially in Germany, Europe’s biggest economy.
Jeanna
SmialekMelissa Eddy
By Jeanna
Smialek and Melissa Eddy
Jeanna
Smialek reported from Brussels, and Melissa Eddy from Berlin.
https://www.nytimes.com/2025/03/26/business/trump-auto-tariffs-europe.html
March 26,
2025
After months
of threats, the White House unveiled plans on Wednesday to impose tariffs on
automobiles imported to the United States, a plan that is likely to hit car
companies across the European Union hard.
The move —
which would place a 25 percent tariff on all cars not built in the United
States — could ramp up pressure on Europe to respond with countermeasures.
European
Union officials have already announced plans to allow tariffs that were
instituted during President Trump’s first term to snap back into place, and
have said they will place a new set of tariffs on a wide variety of American
goods — from lingerie to soy products — by mid-April.
But those
measures were a response to steel and aluminum tariffs. And their first wave,
meant to hit American whiskey and motorcycles, was delayed to allow for more
negotiating time and over fears of a stark American response that could crush
European wine and Champagne exports.
The latest
U.S. move may intensify the urgency for the European Union to retaliate.
Automotive tariffs could squeeze an industry that is already vulnerable —
especially in Europe’s biggest economy, Germany, which sends American consumers
cars from companies like Volkswagen, Mercedes-Benz and BMW. That makes the
tariffs a serious escalation in a trade war that has already left Europe
scrambling.
“I deeply
regret the U.S. decision to impose tariffs on European automotive exports,”
Ursula von der Leyen, president of the European Commission, the executive arm
of the European Union, said in a statement on Wednesday.
The European
Union will “assess this announcement, together with other measures the U.S. is
envisaging in the next days,” she added, and will “continue to seek negotiated
solutions, while safeguarding its economic interests.”
The United
States is the European Union’s largest export market for cars, accounting for
nearly a quarter of all its exported vehicles.
In 2024,
European automakers sent 38.4 billion euros’ worth of cars across the Atlantic,
down 4.6 percent from the previous year, according to the European automobile
makers association, ACEA.
Auto tariffs
“will definitely be a big bummer for the recently returned optimism in Europe,”
said Carsten Brzeski, the global head of macro for ING Research. In particular,
they could “hurt German exports and increase chances of a continued
stagnation.”
The biggest
three German carmakers make up about 73 percent of the European Union’s
automotive exports to the United States, according to the research firm JATO
Dynamics.
And the
United States is the most important export market for Germany’s auto industry.
Nearly one of every three Porsches is exported to the United States, while one
of every six BMWs is shipped there. Mercedes, Volkswagen and Audi (a subsidiary
of the Volkswagen Group) have production sites in the United States and Mexico,
but they would be hard hit by the increase in tariffs.
BMW warned
this month that it expected that the growing trade conflicts would cost the
company $1 billion this year.
“If you
overdo it with tariffs, it sends a negative spiral to all market participants,”
Oliver Zipse, the chairman of BMW, told Bloomberg. There are “no winners in
that game.”
Cars are
just one sector facing steep tariff increases. On top of the tariffs on steel
and aluminum, the United States is planning to announce what the administration
calls “reciprocal” tariffs next Wednesday.
The goal of
those, the administration says, is to equalize tariff rates between various
nations and America.
Maros
Sefcovic, the trade commissioner for the European Commission, and Bjoern
Seibert, the head of cabinet for the commission’s president, visited Washington
on Tuesday to talk to their American counterparts — Howard Lutnick, the
commerce secretary, and Jamieson Greer, the U.S. trade representative.
On
Wednesday, European ambassadors heard an account of those meetings, according
to three diplomats who spoke on the condition of anonymity because the talks
were private.
The takeaway
was that reciprocal tariffs could be in the double digits, two of the diplomats
said — perhaps even 20 percent or higher, one added, though the figure was
uncertain and the range of estimates wide. The tariffs would apply across the
board for E.U. countries.
“The EU’s
priority is a fair, balanced deal instead of unjustified tariffs,” Mr. Sefcovic
said on X after his meetings this week. “We share the goal of industrial
strength on both sides.”
Although the
European Union has a relatively low tariff rate on average, the United States
has signaled that it will take other factors into account when calculating
reciprocal tariffs — including value-added taxes. Those are consumption taxes
added to a good or service at each stage of production, and they are given back
to the exporter if a product is exported. Mr. Trump has been a longtime critic
of those policies.
Mr. Trump
said while announcing the auto tariffs on Wednesday that the coming reciprocal
tariffs would be “lenient” and that “we’re going to be very fair.” He offered
few concrete details.
A correction
was made on March 26, 2025: An earlier version of this article misstated the
value of the cars that European automakers sent across the Atlantic last year.
It was 38.4 billion euros, not €38.4 million.
When we
learn of a mistake, we acknowledge it with a correction. If you spot an error,
please let us know at nytnews@nytimes.com.Learn more
Jeanna
Smialek is the Brussels bureau chief for The Times. More about Jeanna Smialek
Melissa Eddy
is based in Berlin and reports on Germany’s politics, businesses and its
economy. More about Melissa Eddy
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