US President Donald Trump recently threatened to raise tariffs on cars from the European Union to 25 %. According to customs experts, the effects of these measures are beginning to be felt before they even come into force.

Some foreign companies are already limiting or completely stopping orders for raw materials from the US. In other words, trade tensions are coming back to US exporters. At the same time, companies are making it clear that they do not want to bear the increased costs themselves, but will pass them on to customers in their final prices.

The automotive sector plays an important role in transatlantic trade. According to the European Automobile Manufacturers Association, it accounts for around 8 % of total trade between the EU and the US. Moreover, the United States is the main market for European cars.

A possible increase in tariffs would thus hit German carmakers such as BMW, Mercedes-Benz and Volkswagen, which have a strong position on the US market, particularly hard. Although these companies operate production plants directly in the US, a large proportion of their luxury and premium models are still imported from Europe.

It is these more expensive cars that would be hit hardest by the new tariffs because they come to the US as finished products. The result could be more expensive for US consumers and a further cooling of trade relations between the two sides.

CMG