Volkswagen, whose premium carmaker Porsche manufactures all of its models in Europe, but sells the most models in the U.S., is particularly vulnerable.
But it’s not just German carmakers that will be harmed by the new tariffs.
Thanks to a long-standing North American free-trade agreement, automakers and their suppliers have developed a complex supply chain with parts and cars often crossing between the U.S., Mexico and Canada multiple times before landing at a dealership. European carmakers are part of that trade.
“Modern vehicle manufacturing is not confined to national borders. Automotive transatlantic value chains today are deeply interwoven,” Matthias Zink, president of automotive supplier lobby CLEPA, said in a statement. “These protectionist tariffs risk breaking apart a trading partnership built over decades.”
Trump is also threatening to hit back against any countries that retaliate against next week’s tariffs.
The trade war could not come at a worse time for Germany’s auto sector, which is “facing a perfect storm” both in China and in the U.S., said Redeker of the Jacques Delors Centre.
“German manufacturers are now at risk of being shut out of the U.S., as well,” he said. “In effect, Germany’s two most important export markets outside the EU are drying up — each for different reasons, but at the same time.”
Nette Nöstlinger, Camille Gijs, Joshua Berlinger and Oliver Noyan contributed reporting.
