Frankfurt — Shares in German carmakers slid on Monday after President Donald Trump decided to hike US tariffs on imported European cars to 25% from the 15% levy previously agreed, dealing a fresh blow to the already battered sector.
The pan-European vehicles and parts index was down 2.3% by 10.46am GMT, while shares in Porsche, BMW, Mercedes-Benz and Volkswagen were all down 2%-3%.
Trump said on Friday that the EU has not complied with a deal reached between Washington and Brussels last year that lowered US duties on vehicle imports to 15%. Implementation by the bloc has been slow and is not expected to be completed before June.
The tariff announcement, which Trump said will force European companies to move production to the US more quickly, now upends that deal and has drawn sharp rebukes from European politicians and trade groups.
Refund requests
The head of Anfia, the lobby of Italy’s vehicle part makers, which largely supply German carmakers, said the industry is now better prepared to handle higher duties after the initial round of US tariffs last year. “But it’s just another slap in the face after we’ve already taken a barrage of blows,” Roberto Vavassori said.
He added that the duty hike may have been prompted by the Trump administration’s need to limit damage as it faces a wave of refund requests after the US Supreme Court struck down some of the president’s tariffs in February. “That’s the only possible rationale I can see … But this administration is all about keeping you on your toes,” Vavassori said.
Additional duties will further weaken the position of Germany’s premium car manufacturers, said Matthias Schmidt, European vehicle market analyst at Schmidt Automotive.
He expects 2026 to be “another year of profit warnings” noting that Audi and Porsche are among the most exposed companies due to the absence of US production facilities.
Bernstein Research estimates that the additional 10 percentage points in tariffs would cost Germany’s carmakers €2.6bn in operating profit this year. Manufacturers are likely to attempt to offset part of the burden with higher prices, it added.
Germany’s export-dependent vehicle sector has already been under strain from softening demand in China and slowing global growth as well as higher input and labour costs.
Negotiating tactic
Volkswagen Group alone, which includes the Audi and Porsche brands, suffered a €4bn hit due to US tariffs in 2025.
Sweden’s Volvo Cars, whose shares were 0.2% lower, said it is too early to comment on the possible implications of the tariff increase.
Rico Luman, senior economist at ING Research, noted that Trump has regularly used tariff threats as a negotiating tactic but has not always followed through and applied them.
“The EU adoption and legislative process is usually time-consuming,” he said. The threatened tariff could urge the European parliament and European Council “to speed up formal adoption”.
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