EU, Germany React to US Auto Tariffs

Germany’s Vice Chancellor and Economy Minister Robert Habeck on Thursday urged a strong European Union response to U.S. President Donald Trump’s newly announced import tariffs on cars, warning that the measures would harm global trade.

“We must not give in to the U.S. We need to show strength and self-confidence,” Habeck said.

Shares in major German automakers fell sharply following the announcement, with Volkswagen—the most exposed due to its reliance on Mexican production and lack of U.S. manufacturing for Audi and Porsche—dropping 5.1% in pre-market trading. Mercedes-Benz, BMW, and Daimler Truck each declined around 3.5%, while auto supplier Continental fell 2.9%.

Industry and Leaders Warn of Trade Disruption

Germany’s VDA auto lobby condemned the tariffs as a “fatal signal” for rules-based trade, warning they would damage businesses and global supply chains.

“The German automotive industry is calling for immediate U.S.-EU negotiations on a bilateral agreement,” VDA President Hildegard Mueller said in a statement.

European Commission President Ursula von der Leyen criticized the move, calling it “bad for businesses, worse for consumers.” France’s Finance Minister Bruno Le Maire suggested the EU should retaliate with tariffs on U.S. goods, while the UK said it was not planning immediate countermeasures.

Trump has defended the tariffs as necessary to protect U.S. businesses and boost domestic manufacturing. However, Habeck argued they would ultimately hurt the U.S. economy, along with German automakers and the broader EU.

Global Reactions and Economic Impact

Half of all cars sold in the U.S. are domestically produced, with imports largely coming from Mexico, Canada, Japan, South Korea, and Germany.

Japan called the tariffs “extremely regrettable,” with Prime Minister Shigeru Ishiba seeking an exemption, citing Japan’s substantial U.S. investments. South Korea’s Trade Minister Ahn Duk-geun convened an emergency meeting with automakers, pledging a response plan by April.

Canada’s Prime Minister Justin Trudeau labeled the tariffs a “direct attack” on Canadian workers, while research by Germany’s IfW Institute suggested Mexico and Canada would bear the brunt of the economic impact, with German GDP projected to dip just 0.18%.

“Export losses are limited, as cars are often produced near their sales markets,” IfW economist Julian Hinz told FAZ.