Germany’s economy in crisis due to 25 percent additional tax on autos, Europe criticizes economic risk

Agency. European automobile manufacturers, already struggling with sluggish domestic economic growth and increasing competition from China, on Thursday denounced the US import tariffs as a burden.

##They said it would punish consumers and companies on both sides of the Atlantic equally. The new 25 percent import tax announced by US President Donald Trump on Wednesday will “hurt global automobile manufacturers and American products alike,” the European Automobile Manufacturers Association said in a statement.

The head of Germany’s auto industry association, the Führer Association, said the tariffs would “have the most negative consequences for carmakers and every company in the deeply interconnected global supply chain, including consumers in North America.”

## “The consequences will cost growth and prosperity on all sides,” Hildegard Müller said in a statement. This is a major risk for BMW, Volkswagen, Mercedes-Benz, Volvo, Stellantis and their vast network of suppliers, as well as for the entire European economy.

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##The US is the European auto industry’s largest export destination, and in 2023, European automobile manufacturers shipped 56 billion euros worth of vehicles and parts to the US. Europe’s auto industry supports 13.8 million jobs, or 6.1 percent of total European Union (EU) employment.

European carmakers are already facing a shrinking domestic market and new competition from cheaper Chinese electric vehicles. Any problems in the auto industry would impact the European economy. It did not grow at all in the last quarter of 2024 and was up just 0.9 percent for the entire year.

The most at risk are carmakers in Germany and Italy, as 24 percent of Germany’s and 30 percent of Italy’s non-EU exports go to the United States. Germany is home to major automobile manufacturers such as Volkswagen, Mercedes-Benz and BMW.

“This will be a major blow to a sector that not only provides millions of jobs but also contributes a large proportion of the bloc’s gross domestic product (GDP),” writes Oxford Economics analyst Clarissa Hahn. She said German exports fell by 7.1 percent and Italian exports by 6.6 percent.

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##US carmakers are less vulnerable to retaliation because they export only about 2 percent of their production to the EU. Still, shares in Detroit’s Ford and General Motors fell sharply in the US, as the US industry relies heavily on cross-border trade between suppliers.

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##”The EU and the US must urgently engage in dialogue to avoid the damaging consequences of a tariff and trade war,” the European Manufacturers’ Association said. Müller, head of the German Auto Association, called for immediate talks on a bilateral agreement between the EU and the US.

##According to him, it will offer a forum ‘to discuss various tax and non-tax barriers for automobile products and to lead to a more balanced approach’.