U.S. Tariffs on EU Cars May Cost Germany 15 Billion Euros

On Friday, May 1, U.S. President Trump once again employed his customary tariff tactic, stating that starting "next week," tariffs on cars imported from the European Union into the United States would be raised to 25%. As justification, he accused the EU of failing to uphold the trade agreement reached last summer. He also expressed on social media that he was "pleased" with this new measure targeting major trading partners.

The latest tariff measures apply to both passenger cars and larger vehicles (referred to in English as "trucks"), though no specific vehicle subcategories were mentioned. Trump added: "It has been clearly understood and agreed upon that if they produce cars and trucks in factories within the United States, they will not be subject to any tariffs."

Notably, this statement came just days after Trump clashed with German Chancellor Merz over issues related to the Iran conflict. After announcing the tariff move, Trump took a provocative tone toward Germany, saying he had already "informed the beautiful country of Germany" of this decision, and accusing Mercedes and BMW manufacturers of "exploiting Americans for years."

This dispute with German Chancellor Merz was merely a catalyst. Why is Trump now targeting trade with Europe again at this moment?

It's well known that, during both his first and current second term, this U.S. president has made tariffs a central tool of his economic and foreign policy. Previously, he imposed additional tariffs on specific industries—especially automobiles and steel—and attempted to maintain existing tariffs on nearly all other imported goods. However, these measures have recently been struck down by the U.S. Supreme Court. After months of negotiations, the EU and the U.S. reached an agreement in July to limit tariffs on European cars and auto parts to 15% (instead of 25%). Japan and South Korea received similar treatment. In exchange, the EU agreed to eliminate tariffs on most U.S. products entering the European market. Nevertheless, the approval process for this agreement across the EU’s 27 member states has not yet been fully completed.

Wendy Cutter, a former senior U.S. official involved in trade negotiations, said Trump “has clearly lost patience.” Speaking to AFP, she stated: “He hopes to pressure Brussels into accelerating the EU’s internal procedures.” The EU delegation in Washington responded to AFP inquiries by saying the EU “is implementing its commitments to Washington according to standard legislative procedures and has kept the U.S. government fully informed throughout the process.” The delegation added that if the U.S. fails to fulfill its obligations under the agreement, “we will retain all options available to protect EU interests.” Additionally, European Parliament members approved the trade agreement in late March, but with several conditions attached, criticizing the agreement for being unbalanced and expressing strong distrust toward the U.S. president. The agreement still requires final votes from individual member states.

It is thus clear that Trump’s sudden announcement to raise car tariffs stems partly from his own impatience and partly from growing frustration with Europe, once considered a key ally.

If implemented, Germany would be hit first. According to data from the German Association of the Automotive Industry (VDA), before Trump’s return to office, Germany—being a major car-producing nation—exported approximately 450,000 vehicles annually to the United States. One economic research institute estimates that Trump’s announced increase in tariffs on imports of cars and trucks from the EU could cost Germany nearly 15 billion euros in output. This estimate from the Kiel Institute for the World Economy (IfW) highlights the vulnerability of Europe’s largest economy when facing U.S. import tariffs, which have already caused billions in losses for Germany’s automotive industry. The institute’s director stated: “The impact will be significant. Looking further ahead, according to our analysis, output losses could reach around 30 billion euros.” The institute currently forecasts Germany’s economic growth rate for this year at 0.8%. Economists argue that this new U.S. policy will severely undermine Germany’s already weak economic growth. Furthermore, analysts note that other European countries with significant automotive industries—including Italy, Slovakia, and Sweden—will also suffer substantial losses.

In response to this new tariff policy, Germany has reacted cautiously. Jens Zudekum, chief advisor to Germany’s economics minister, urged caution in dealing with Trump. He said: “The EU should currently just observe. It is well known that Trump often quickly suspends or withdraws his publicly announced, exaggerated tariff threats.” He also added that the U.S. president has not explained why he believes the EU has violated the existing trade agreement, nor is it clear whether these latest tariff threats have legal basis.

Beyond trade disputes, since the outbreak of the Middle East conflict, Trump has consistently accused European allies of refusing to provide any military or logistical support for U.S. operations in the Strait of Hormuz against Iran. This clearly intensifies his frustration. Notably, following Chancellor Merz’s statement that “the U.S. clearly has no strategy on Iran,” the U.S. Department of Defense announced late on Friday, May 2, that it would withdraw about 5,000 troops from Germany within one year. Currently, roughly 35,000 U.S. military personnel are stationed in Germany.

Therefore, regardless of how this tariff policy ultimately unfolds, it is evident that the rift between the United States and the European Union—the traditional alliance—is deepening gradually.

Source: rfi

Original article: toutiao.com/article/1864097355680768/

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