US Tariffs on EU to Impact Major European Carmakers

2025-02-03 global

Brussels, Monday, 3 February 2025.
New US tariffs threaten European carmakers like Volkswagen and BMW, increasing costs and affecting US market strategies.

Market Impact and Stock Reactions

European automotive stocks experienced significant declines following Trump’s tariff announcements, with major manufacturers facing substantial value erosion. Companies like Volkswagen, BMW, Porsche, and Stellantis saw their shares drop by approximately 5-6% [1]. Financial analysts estimate that the impact could be severe, with Volkswagen potentially seeing €8 billion of revenue affected, while Stellantis could face exposure of up to €16 billion [2].

Trade Relations and Political Response

The escalating trade tensions come as Trump declared his intention to ‘absolutely’ impose tariffs on the EU, citing unfair trade practices [5]. European leaders have united in their response, with French President Emmanuel Macron warning that the EU would ‘make itself respected and thus react’ if attacked commercially [3]. German Chancellor Olaf Scholz has indicated that while the EU prefers reaching a trade agreement, they are prepared to implement their own tariffs if necessary [3].

Broader Economic Implications

The timing of these tariffs is particularly significant as they follow Trump’s recent implementation of duties on other major trading partners. On February 1, 2025, Trump signed executive orders imposing 25% tariffs on Mexico and Canada, and 10% on China, effective February 4, 2025 [6]. These measures have already triggered global market uncertainty, with economists predicting hindered economic growth both in the US and globally [4].

Industry Response and Future Outlook

The automotive industry faces a complex challenge as these tariffs threaten to disrupt established supply chains and manufacturing strategies. With nearly 90% of North American auto exports directed to the US market [4], European manufacturers may need to reconsider their production and distribution networks. Industry analysts predict these measures could lead to a 10% reduction in automotive production in the next fiscal quarter [1], potentially forcing manufacturers to adjust their pricing strategies and market approaches.

Sources

US tariffs European carmakers