In a bold statement that highlights the far-reaching consequences of global trade policy, Germany’s automotive industry voiced its concerns over former U.S. President Donald Trump’s threatened tariffs on automotive imports. The warnings came as leading automakers, including German giants like Volkswagen, Mercedes-Benz, and BMW, emphasized the detrimental impact such tariffs could have—not just on international carmakers but on American consumers and the broader economy.
Speaking at an annual press conference, Hildegard Müller, president of Germany’s VDA auto association, made it clear that Trump’s proposed tariffs—potentially as high as 25% on imports from countries like Mexico—would lead to higher car prices in the United States, potentially fueling inflation.
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“Donald Trump promised during his election campaign to reduce inflation,” Müller stated. “In this respect, we are hoping for further discussions on this topic.”
While the new administration did not immediately implement the tariffs, the continued threat sent ripples through the global automotive market. Stock prices of automakers in Europe and Asia fell in response, as companies brace themselves for a potential disruption in the supply chain and increased costs that would inevitably trickle down to consumers.
Global automakers are warning that these tariffs could significantly increase the cost of new vehicles for American consumers. Many cars sold in the United States are either manufactured in Mexico or use parts sourced from Mexican suppliers. Trump’s tariffs would target this cross-border supply chain, which plays an essential role in keeping production costs manageable.
Volkswagen, the world’s second-largest automaker, expressed its concerns in a statement, saying, “We are concerned about the harmful economic impact that proposed tariffs by the U.S. administration will have on American consumers and the international automotive industry.”
Automotive giants like Volkswagen, BMW, and Mercedes-Benz, which already have production plants in the U.S., highlighted their long-standing commitment to the American market. Volkswagen, for instance, has invested over $10 billion in the U.S., including its Chattanooga, Tennessee, plant and its electric vehicle partnership with Rivian. These investments, the automaker argues, underscore the collaborative role foreign automakers play in strengthening the U.S. economy.
Mexican manufacturing has become a cornerstone of North American automotive production. Cars made in Mexico aren’t just exported to the U.S.; Mexican facilities also supply critical components for vehicles assembled in American plants. Major auto suppliers like Bosch and Continental are working to mitigate the potential fallout from tariffs, but relocating production would require years of planning and significant financial resources.
Moreover, the tariffs wouldn’t only affect German automakers. Japanese and South Korean companies like Honda, Mazda, Hyundai, and Kia, which also manufacture vehicles in Mexico, would feel the pressure. Asian automakers already saw their stocks decline on news of the tariff threats.
European carmakers, particularly Volkswagen and Stellantis, could be hit hard by these potential tariffs due to their reliance on Mexican manufacturing for U.S. sales. On Tuesday, shares of Volkswagen dropped 0.8%, while Stellantis, the parent company of brands like Jeep, Chrysler, and Fiat, saw a 1.3% decline.
Stellantis Chairman John Elkann has reportedly been in discussions with Trump’s team to negotiate solutions, and other European automakers have followed suit. Volkswagen and its German peers have stressed their role in creating American jobs, especially in Republican-leaning states where their plants are located.
Hildegard Müller of the VDA emphasized the importance of recognizing these contributions during tariff discussions, stating, “We have a lot to offer—many jobs in the USA, a functioning production network that also creates growth and prosperity in the USA.”
While the intended purpose of tariffs is to incentivize companies to bring manufacturing back to the United States, the reality is far more complex. Automakers argue that tariffs would not only make cars more expensive for American consumers but could also lead to job losses within the very industry the tariffs are meant to protect.
In fact, the U.S. automotive industry is highly interconnected with international players. The supply chains that stretch across borders allow automakers to keep prices competitive. Disrupting this balance with steep tariffs risks triggering a chain reaction that could hurt consumers, dealers, suppliers, and manufacturers alike.
The global automotive industry is watching closely as the U.S. debates its trade policy. German automakers, along with their counterparts in Asia and Europe, are sounding the alarm on the economic repercussions of tariffs. While Trump’s administration may see tariffs as a way to boost domestic production, the broader impact suggests that such policies could harm American consumers and jeopardize the health of the global auto industry.
With billions already invested in U.S. operations, automakers are hoping for open dialogue and practical solutions that support both domestic jobs and international cooperation. For now, the industry—and consumers—remain on edge, awaiting the next move in this high-stakes economic chess game.