U.S. tariffs threaten further crisis in German car exports
Not only China but also the United States is considering increasing tariffs on cars imported from Europe. This is another serious threat to Europe's already weakened automotive sector.
The German automotive industry is on the brink of a crisis due to insufficient demand for electric cars. Volkswagen's weakening position in its key market, China, exacerbates the situation, and future prospects do not inspire optimism, especially in light of the trade war between the EU and China. Unfortunately, much suggests that this is not the end of the problems for German brands, which expect another blow—this time from the USA.
Although there are still a few months until Donald Trump's presidency starts, analysts and experts are already predicting the potential impact of his decisions on the global economy. If the proposals made during the campaign are realised, European brands could lose significantly.
This is due to the potential increase in tariff rates on vehicles imported from Europe to the USA. The Trump administration may raise tariffs from 2.5% to 12.5%. According to analysts at Stifel Europe Bank, German manufacturers could see a reduction of up to 15% in their profits.
As reported by the German daily "Handelsblatt," German brands export nearly 600,000 cars annually from European factories and 350,000 cars from Mexican factories to the USA, with tariffs on products from Mexico potentially being even higher.
However, it is worth noting that not all German manufacturers are equally threatened. BMW is in a relatively strong position, as it operates many factories within the USA. The same goes for Mercedes and Volkswagen. Nonetheless, this does not negate that many models from these brands are still imported.
Higher tariffs may impact Porsche the most, as all their cars sold in the USA are imported from Europe. Audi will also find itself in an unfavourable position, as the Q5 model—a sales success in the USA—is produced in Mexico.
As " Handelsblatt notes," the threat from the USA has arrived at the worst possible time. For years, America and China have been the largest export markets for German brands, and now, with declining sales in China, the last thing manufacturers from our western neighbour need is trouble in the USA.
