Trump Threatens 25% Tariffs on EU Auto Imports, Markets Rattle
The White House announced potential 25% tariffs on European automobiles, escalating trade tensions and sending German automaker stocks lower.
Tobias Richter
European Markets Editor
President Trump announced on Wednesday that his administration is considering imposing a 25% tariff on all automobile imports from the European Union, a significant escalation in transatlantic trade tensions that could disrupt global supply chains.
"The European Union has been taking advantage of the United States for decades," Trump posted on Truth Social. "Their cars flood our market while our products face barriers. This ends now."
The announcement sent European automaker stocks sharply lower. BMW fell 5.2%, Mercedes-Benz dropped 4.8%, and Volkswagen declined 4.1%. The Euro Stoxx Autos & Parts index had its worst day since September 2024.
Estimated impact if implemented:
- EU auto exports to US: ~$56 billion annually
- Potential tariff revenue: ~$14 billion
- German GDP impact: estimated -0.3% over 12 months
- US car price increase: estimated $3,500-$7,000 per European vehicle
EU Trade Commissioner Valdis Dombrovskis responded by calling the threat "disproportionate and counterproductive" and warned of retaliatory measures targeting US tech and agricultural exports.
Analysts noted that Trump has used tariff threats as a negotiating tool in the past, and that the 90-day review period gives both sides time to negotiate. However, the threat alone is already affecting investment decisions and supply chain planning.