Trump’s 25% car tariff rattles markets: EU industry leaders, analysts react
US President Donald Trump slapped a 25% tariff on all auto imports starting next week, with auto parts to follow by 3 May 2025, sending shockwaves through global markets.
The move drew swift condemnation from European leaders and industry stakeholders.
The White House defended the decision on national security grounds, citing continued risks posed by foreign automotive imports to the US industrial base.
“I find that imports of automobiles and certain automobile parts continue to threaten to impair the national security of the United States and deem it necessary and appropriate to impose tariffs,” the White House statement said.
The reaction across the Atlantic was swift and severe. German Economy Minister Robert Habeck called for a strong and unified European response, stating: “The EU must now give a firm response to the tariffs—it must be clear that we will not back down in the face of the USA.”
The German Association of the Automotive Industry (VDA) warned of serious economic fallout.
Its president, Hildegard Müller, said the tariffs send “a disastrous signal for free, rules-based trade” and risk disrupting tightly integrated global supply chains.
“The consequences will cost growth and prosperity on all sides,” she added, urging urgent US-EU negotiations to avert further escalation.
Ties between Germany and the US
Müller highlighted the deep economic ties between the German auto industry and the US. German firms employ around 138,000 workers in the US, including 48,000 in manufacturing and 90,000 in parts supply. Of the more than 900,000 vehicles produced in the USA, around half are exported all over the world.
“The USA is an important component of the German automotive industry's production network, and the global market is also served from there,” the VDA statement said.
A recent VDA survey of medium-sized automotive firms showed that 86% expect to be affected by the tariffs—32% directly and 54% indirectly through supplier and customer networks. The association emphasised that such disruption could endanger the global production model that underpins the industry’s competitiveness.
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The European Automobile Manufacturers’ Association (ACEA) added its voice to the chorus of concern, warning that the new tariffs come at a "watershed moment" for an industry undergoing a complex transition toward electrification, digitisation, and sustainability, amid intensifying global competition.