Republican presidential candidate and former U.S. President Donald Trump speaks to attendees during a campaign event at the Johnny Mercer Theater on September 24, 2024 in Savannah, Georgia.
Brandon Bell | Getty Images
President-elect Donald Trump’s promise to impose a empty tariff on all goods coming into the US could have devastating consequences for both European and German car manufacturers crisis-ridden The automotive sector is considered particularly vulnerable.
At the end of September, Trump announced during the election campaign his desire to convert the German car giants into American car companies.
“I want German car companies to become American car companies. I want them to build their plants here,” Trump said said in Savannah, Georgia. He added that the word “tariff” was “one of the most beautiful words I have ever heard” and “music to my ears.”
Trump has since then announced plans to introduce new tariffs on China, Canada and Mexico as one of his first official acts. The measures include an additional 10% tariff on all Chinese products entering the US and a 25% tariff on all goods coming from Canada and Mexico.
Europe was not mentioned in Trump’s initial tariff announcement, but policymakers in the EU are likely to be concerned that it is only a matter of time before the president-elect turns his attention to the 27-nation bloc’s automotive sector.
For Germany, the prospect of US tariffs on European cars comes at a time when it is one of the leading original equipment manufacturers (OEMs). is already wobbling.
Volkswagen, Mercedes-Benz Group And BMW have all issued profit warnings in recent months, citing economic weakness and sluggish demand in China, the world’s largest car market.
Rico Luman, senior sector economist for transport and logistics at Dutch bank ING, said the German automotive sector appears to have been significantly affected by Trump’s tariff threats.
According to the statistics agency Eurostat and ING Research, Germany is by far Europe’s largest exporter of passenger cars to the USA. Last year there were exports worth 23 billion euros (US$24.2 billion). This corresponds to 15% of total German exports to the USA
The possible imposition of tariffs on German car manufacturers, Luman said, would therefore make the bad situation even worse.
“It’s the heart of the manufacturing industry, right?” Luman told CNBC via video call. “So the automotive industry is ultimately connected to the steel industry and the chemical industry, so the entire supply chain is involved here.”
A German government spokesman declined to comment when contacted by CNBC.
Volkswagen, BMW and Mercedes-Benz
While some analysts have chosen not to take Trump’s promise to convert German auto companies into U.S. auto companies at face value, they warn that additional U.S. tariffs will deepen challenges for the global auto industry.
“It was rhetoric during the election campaign, but there will be some pressure on imports, whether through a tariff or some other unilateral measure,” Michael Robinet, executive director of automotive consulting at S&P Global Mobility, told CNBC via video call.
“One area that is still a concern for many economists, myself included, is the fact that we are still hovering at essentially 4% unemployment in the United States, so we will be looking to create a lot of additional work in the United States create.” be problematic,” he added.
Volkswagens are seen in the employee parking lot at the Volkswagen automobile assembly plant in Chattanooga, Tennessee, on March 20, 2024.
Elijah Nouvelage | Getty Images News | Getty Images
Regardless of Trump’s proposed tariffs on China, Canada and Mexico, the elected US president has promised to introduce a blanket tariff 10% or 20% Customs duty on all goods imported into the country. However, it remains unclear whether this promise will become US policy.
“We are evaluating Trump’s proposed tariffs,” a Volkswagen spokesperson told CNBC via email.
The Wolfsburg-headquartered company said over 90% of vehicles currently sold in the U.S. market are manufactured in North America and meet the criteria for duty-free treatment under a U.S.-Canada-Mexico Free Trade Agreement (USMCA). .
Nevertheless it is so Thought that Trump’s proposed tariffs on Canada and Mexico would end the USMCA.
Mercedes Benz, meanwhile, said it employs more than 11,000 people in the United States and produces primarily passenger cars and vans at twelve key locations. “We look forward to constructive dialogue with the new administration in the United States,” a spokesperson told CNBC.
BMW declined to comment on Trump’s tariff threats. The company has a nationwide presence of approximately 30 locations in twelve U.S. states, including the largest single BMW manufacturing facility in the world in Spartanburg, South Carolina.
Volkswagen and BMW shares have each fallen about 23% since the start of the year, while Mercedes-Benz Group has lost about 13% over the same period.
“Everyone just has to be ready”
“Trump wants more tariffs, so everyone just has to be ready,” Julia Poliscanova, senior director of vehicles and e-mobility supply chains at campaign group Transport & Environment, told CNBC via video call.
“I think it’s just important that Europe continues on its own course, be it the European Green Deal or the electrification agenda. Trump risks putting America behind on a lot of these clean technologies and electric vehicles, so it’s an opportunity for Europe to actually accelerate at the same time,” Poliscanova said.
“In the short term it will be bad news for German car manufacturers, for example, but it is important to understand that this is how the world is. And we simply have to do what is best for Europe and European industrial interests – and that is not slowing down,” she added.
