Donald Trump Hits European and UK Carmakers with 25% Tariffs
On the evening of Wednesday, March 26th 2025 in Washington DC, and in a devastating blow to global car makers, President Donald Trump announced a 25% tariff on all car imports into the United States which translates into levies amounting to circa USD 100 Billion. The President was quoted as saying, “This is the beginning of liberation day in America, this is very modest. What we’re going to be doing is a 25% tariff on all cars not made in the United States”. He went on to say, “We’re going to charge countries for doing business in our country and taking our jobs, taking our wealth, taking a lot of things that they’ve been taking over the years”.
This move of course exacerbates the global trade war started by President Trump, taking the animosity towards him from his allies to new heights. The Shadow Trade Secretary to the House of Commons in the United Kingdom noted that he is concerned with this auto tariff, adding that the UK automotive sector is under pressure and British jobs are clearly at risk. The president of the EU (European Union), Ursula von der Leyen, said, “I deeply regret the US decision to impose tariffs on EU automotive exports”. The German Economy Minister Robert Habeck has called for the EU to provide a decisive response.
Experts in this arena suggest that due to the imposition of a 25% car tariff, the price of cars could rise between USD 5,000 and USD 15,000 depending on the vehicle, and even those automobiles assembled in the United States could rise between USD 3,000–USD 8,000. The rise in US assembled automobiles, according to analysts, is that roughly 50% of parts in US-produced cars are imported and tariffs on auto parts will significantly increase production costs. The United States imported circa 8 million cars in 2024 with a trade value of over USD 240 Billion, the country’s total automotive vehicle imports including engine and parts was over USD 474 Billion.
Certain media outlets in the United Kingdom are saying that the government in private is advising car manufacturers that they are confident of securing a bi-lateral trade deal with the U.S. administration and will hope to avoid President Trump’s car tariffs on the importation of vehicles into the United States. The Chancellor of the Exchequer, Rachel Reeves, has been quoted as saying “the Government is in intense negotiations with the U.S.”. Data released by the Society of Motor Manufacturing and Traders confirm that Europe is the biggest export market for UK made motor vehicles, with the United States firmly in second place enjoying circa 16.9% of UK car exports. Analysts suggest Jaguar Land Rover may be one of the hardest hit by tariffs, and Aston Martin saw its share price fall by 6% on the London Stock Exchange in response to Trump’s announcement.
In Europe, there is outrage over the car tariffs with the VDA (German Association of Automotive Industry) warning of a serious economic fallout. The association further added that the consequence of tariffs will cost prosperity and growth on both sides of the Atlantic. President of the VDA, Hildegard Müller, highlighted the fact that German firms employ circa 138,000 workers in the U.S.A., split 48,000 in manufacturing and 38,000 in parts supply. Various automotive bodies have urged officials in the European Union to get back round the table, with the Trump administration and thrash out a trade deal instead of talking about reciprocal tariffs.
Officials of the European Union who last week met with their U.S. counterparts see little chance of averting this current round of tariffs. There have been muted signs of the EU and Canada working together against the U.S., but President Trump threatened larger tariffs if the two countries joined forces. EU officials suggest that Trump will issue an EU bloc-wide tariff rather than a country by country tariff. Analysts advise that Volvo cars and Porsche stand to be the two hardest hit manufacturers should tariffs proceed on the 2nd of April 2025, whilst Thursday 27th March saw shares in Porsche plunge 5.4%, Mercedes-Benz AG fall 4,8%, Ferrari and BMW AG fell 4.7% and 3.7% respectively and Volkswagen AG fell circa 2%.
Amongst all the outrage and wringing of hands regarding this car tariff, President Donald Trump has gone on record as saying, “I couldn’t care less if automakers raise their prices” in a response to planned tariffs on imported vehicles. He went on to say, “I couldn’t care less if they raise prices, because if they do, people are going to buy American-made cars”. The new automobile tariffs come into effect on 2nd April 2025, whilst tariffs on parts are set to start in May 2025 or later.
