A Volkswagen logo is visible on a tower at the Volkswagen Osnabrück GmbH plant, positioned behind a red traffic signal.
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European automotive manufacturers experienced a downturn on Wednesday morning, continuing their recent decline as U.S. President Donald Trump’s extensive tariffs on a variety of countries, including an astonishing 104% duty on China, took effect.
Trump’s new trade policies, which were implemented at 5 a.m. London time, impose a 20% tariff on the European Union, a 24% tariff on Japan, and a 49% tariff on Cambodia.
According to S&P Global, these “reciprocal” tariffs will be enacted independently, rather than in addition to current U.S. auto tariffs.
Last Thursday, the Trump administration introduced a 25% tariff on all foreign vehicles imported into the U.S. Furthermore, the White House expressed intentions to levy tariffs on certain auto parts by May 3.
Shares of French auto parts manufacturer Valeo dipped by 4.3% on Wednesday morning, falling toward the lower end of the pan-European Stoxx 600 index.
Volkswagen from Germany, along with Mercedes-Benz Group and BMW, saw decreases of up to 3%, though they managed to recover somewhat, with BMW hitting a new 52-week low.
In Asia, Japan’s Nissan and Toyota reported declines of 7% and 2.6% respectively on Wednesday.
Experts warn that German automotive producers will likely bear the brunt of the U.S. trade policies.
“The tariffs pose a significant challenge, especially for German automotive manufacturers that export hundreds of thousands of vehicles to the U.S. each year (749,000 anticipated in 2024) and produce many vehicles in the U.S. that rely on European parts,” stated Rico Luman, senior sector economist for transport and logistics at Dutch bank ING, in comments to CNBC via email.
“Finding ways around the tariffs is difficult, and they seem to be here for the foreseeable future, necessitating adjustments in product offerings, pricing strategies, and production locations,” he noted.
In response to the latest U.S. tariffs, China’s foreign ministry pledged to take “resolute and vigorous” actions to safeguard its own interests on Wednesday.
An escalating trade conflict is anticipated to significantly impact the global automotive sector, especially due to the high degree of globalization in supply chains and a strong dependence on manufacturing in North America.
Since the introduction of Trump’s automotive tariffs, several major car manufacturers have responded by announcing price hikes, implementing import fees, halting shipments, idling facilities, and considering staff layoffs.
A logo displayed outside the BMW AG showroom in Madrid, Spain, on Friday, March 28, 2025.
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According to Luman from ING, while a decrease in U.S. unit sales is likely to negatively affect German automakers amidst an already complicated web of challenges, the situation “doesn’t appear catastrophic” at this moment.
“China is becoming increasingly vital, and the domestic market there demands greater focus,” Luman remarked. “I believe that strengthening competitive capabilities and increasing sales in the European home market (while also developing other export opportunities globally) will be the key priorities moving forward.”
Tariff exposure
“BMW and Mercedes rank among the leading exporters of vehicles by value from the U.S., making them particularly vulnerable to retaliatory tariffs among European car manufacturers,” Rella Suskin, an equity analyst at Morningstar, communicated to CNBC via email.
She elaborated that both manufacturers might face double tariffs on cars produced in Mexico and Canada.
“Nonetheless, we believe that most models produced by these companies in Mexico or Canada can easily be replaced with vehicles imported from Europe, which only incur the standard 25% global auto tariff,” she added.
