Germany has declared that it “will not capitulate” and emphasized that Europe needs to “react decisively” as US President Donald Trump places a 25% tariff on imported vehicles and automotive parts as part of his latest trade measures.
Other prominent global economies have pledged to retaliate, with the French president labeling the action “futile” and “illogical”, while Canada termed it “a direct assault”, and China accused the US of breaching international trade regulations.
Automobile shares from nations such as Japan and Germany saw declines. In the US market, General Motors’ shares dropped by 7%, and Ford’s shares fell more than 2%.
Trump has warned of “much larger” tariffs should Europe collaborate with Canada in what he refers to as “economic damage” to the US.
The new car tariffs are set to take effect on April 2, with charges on businesses importing vehicles commencing the following day. Taxes on parts are expected to start in May or later.
Tariffs are taxes imposed on goods imported from foreign nations.
While these measures can shield domestic industries, they also increase expenses for companies dependent on foreign parts.
The companies that import these goods into the country are responsible for paying the tax to the government. Those firms may opt to pass on some or all of the tariff’s cost to consumers.
Last year, the US imported around eight million vehicles, representing approximately $240 billion (£186 billion) in trade, which accounted for nearly half of total sales.
Mexico remains the primary source of cars for the US, followed by South Korea, Japan, Canada, and Germany.
Analysts from the Anderson Economic Group have estimated that tariffs on parts solely from Canada and Mexico could lead to cost increases of between $4,000 and $10,000 depending on the vehicle.
German Economy Minister Robert Habeck stated that the European Union has to “react decisively”.
“It should be clear that we will not succumb to the US. We must demonstrate strength and confidence,” he remarked.
France supported this united stance, with its finance minister asserting that Europe must retaliate with tariffs on American goods.
During a press briefing on Thursday, French President Emmanuel Macron stated that it was “not the appropriate moment” for the US to be implementing tariffs.
“Imposing tariffs disrupts value chains, leads to short-term inflationary pressures, and destroys jobs,” he mentioned in Paris.
“This entire situation is essentially a waste of time and will generate a great deal of anxiety,” he added, urging Trump to reconsider the decision.
Canadian Prime Minister Mark Carney labeled the tariffs as “a direct attack” on Canada and its automotive sector, indicating that it “will harm us,” while trade alternatives were being explored.
In the UK, the SMMT, the car industry association, remarked that the announcement of car tariffs was “not unexpected but, nonetheless, disappointing”.
Uniparts founder John Neill stated that the Trump tariffs were “a boon for the Chinese”, suggesting that international consumers would turn to Chinese substitutes in response to a trade conflict.
Meanwhile, China accused Trump of contravening World Trade Organization regulations.
“No one wins in a trade war or tariff conflict. No nation’s growth and prosperity have been realized through the implementation of tariffs,” a spokesperson for the foreign ministry asserted.
Japan has issued warnings that there will be a “considerable impact” on its economic relationship with the US. A government spokesperson described the actions as “extremely regrettable” and indicated that officials requested an exemption from the US.
In South Korea, just a day prior to the new tariffs, Hyundai revealed plans to invest $21 billion (£16.3 billion) in the US and establish a new steel plant in Louisiana.
Trump praised this investment as a “clear indication that tariffs are highly effective”.
Bosch, a German company, expressed its confidence in the “long-term opportunities” within the North American market and announced that it would persist in expanding its operations there.
The International Monetary Fund indicated it does not foresee a recession in the US, but cautioned that a trade war could have a “considerable negative impact” on the economic prospects of Canada and Mexico.
