German Auto Shares Plunge as Trump Imposes 25% Tariffs
German Auto Industry Faces Major Setback
German auto shares dropped significantly after U.S. President Donald Trump announced a 25% tariff on auto imports. This move is expected to have far-reaching implications for the global auto industry, particularly in Germany, which is a major exporter of vehicles to the U.S.
Key Impacts on German Automakers
- Volkswagen shares fell by 5.1% in pre-market trading, being the most exposed due to its large supply base in Mexico and limited U.S. production for its Audi and Porsche brands.
- Other automakers, including Mercedes-Benz and BMW, saw their shares drop by around 3.5%.
- Auto supplier Continental also experienced a 2.9% decline.
Reactions from Germany
Germany’s Economy Minister Robert Habeck called for a firm response from the EU, stating, “The EU must now give a firm response to the tariffs – it must be clear that we will not back down in the face of the USA.”
The VDA car lobby described the tariffs as a “fatal signal” for free, rules-based trade and urged immediate negotiations between the U.S. and the EU.
Broader Economic Implications
Research by the IfW economic institute suggests that while Germany’s GDP will be 0.18% weaker in the first year due to the tariffs, other economies like Mexico and Canada will face more significant impacts.
“Overall, the export losses are limited, as cars are often produced close to the sales market,” said IfW trade economist Julian Hinz.
Conclusion
The newly imposed tariffs by the U.S. have sent shockwaves through the German auto industry, highlighting the need for urgent negotiations to prevent a spiraling trade war. The global economic landscape remains uncertain as stakeholders await further developments.
