Republican presidential candidate, former US President Donald Trump speaks to attendees at a campaign rally at the Johnny Mercer Theater on September 24, 2024 in Savannah, Georgia.
Brandon Bell | Getty Images
President-elect Donald Trump’s commitment to impose a pure fare It could wreak havoc on European automakers, along with Germany, on all goods coming to the US hit by crisis the automotive sector is believed to be particularly vulnerable.
Speaking on the campaign trail in late September, Trump announced his desire to turn the German auto giant into an American car company.
“I want German car companies to become American car companies. I want them to build their factories here,” Trump said he said in Savannah, Georgia. He added that the word tariff is “one of the most beautiful words I have ever heard” and “music to my ears”.
Trump has since announced He plans to impose new tariffs on China, Canada and Mexico in one of his first acts in office. The measures include an additional 10% tariff on all Chinese goods coming to the US and a 25% tariff on all goods from Canada and Mexico.
Europe was not mentioned in Trump’s first tariff announcement, but EU policymakers will be worried that it is only a matter of time before the president-elect turns his attention to the 27-nation bloc’s auto sector.
For Germany, the prospect of US tariffs on European cars comes at a time when major original equipment manufacturers (OEMs). already excited.
Volkswagen, Mercedes-Benz Group and BMW All have issued profit warnings in recent months, citing China’s economic weakness and sluggish demand. the world’s largest car market.
Rico Luman, senior economist in the transport and logistics sector at Dutch bank ING, said the German auto sector is significantly affected by Trump’s tariff threats.
Germany is by far the largest exporter of European passenger cars to the US, exporting 23 billion euros ($24.2 billion) last year, according to data compiled by statistics agency Eurostat and ING Research. This represents 15% of all German exports to the US
Imposing tariffs on German automakers would therefore make a bad situation even worse, Luman said.
“It’s the heart of the manufacturing industry, isn’t it?” Luman told CNBC via video call. “So the automotive industry is linked to the steel industry and the chemical industry, so the whole 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 accept Trump’s pledge to convert German car companies to US car companies at face value, they have warned that additional US tariffs will add to the challenges facing the global auto industry.
“It was rhetoric on the campaign trail, but there will be pressure on imports, either through a tariff or some other unilateral action,” said Michael Robinet, executive director of automotive consultancy S&P Global Mobility. CNBC via video call.
“One area that is still troubling to many economists, myself included, is that we’re hovering around 4% unemployment in the United States, so trying to push a lot of additional jobs in the U.S. is going to be problematic,” he added.
Volkswagens are seen in the employee parking lot on March 20, 2024 at the Volkswagen automobile assembly plant in Chattanooga, Tennessee.
Elijah Novel | Getty Images News | Getty Images
Apart from Trump’s proposed tariffs on China, Canada and Mexico, the US president-elect has vowed to impose a blanket ban. 10% or 20% tax on all goods entering the country. It is unclear, however, whether this commitment will become US policy.
“We are evaluating Trump’s proposed tariffs,” a Volkswagen spokeswoman told CNBC via email.
The Wolfsburg-based company said that more than 90% of the vehicles it currently sells in the US market are produced in North America and meet the criteria for tariff-free treatment under a free trade agreement between the US, Canada and Mexico (USMCA). .
However, it is think 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 US, producing mainly passenger cars and vans at 12 major locations. “We look forward to a constructive dialogue with the new US administration,” a spokesperson told CNBC.
BMW, which has declined to comment on the prospect of Trump’s tariff threats, has about 30 locations nationwide in 12 US states, including the world’s largest BMW production facility in Spartanburg, South Carolina.
Shares in Volkswagen and BMW are down around 23% year-to-date, while Mercedes-Benz Group is down roughly 13% over the same period.
“Everyone must be ready”
“Trump wants more tariffs, so everyone needs to be ready,” Julia Poliscanova, senior director of vehicle and electric mobility supply chains at the Transport & Environment campaign, told CNBC via video call.
“I think it’s important that Europe follows its own path, be it in the European Green Deal or the electrification agenda. Trump risks leaving America behind on this clean technology and electric vehicle, so it’s an opportunity for Europe to really accelerate at the same time,” he said. Poliscanova
“There will be bad news in the short term for, for example, German car manufacturers, but it is important to understand that this is the world. And we have to do what is best for Europe and European industrial interests, and that is not slowing down,” he added.
