European auto industry still faces difficulties despite US tax cuts

Cars waiting to be exported at a port in San Diego, California (USA), March 26, 2025. (Photo: Reuters/VNA)

On July 28, shares of major German automakers such as Porsche, Volkswagen, BMW and Mercedes-Benz all fell more than 3%.

The European Automobile Manufacturers Association (ACEA) said that the 15% US tariff on European goods would have a negative impact not only on the European but also the US auto industry.

German Chancellor Friedrich Merz also said that the country's economy would suffer significant losses due to the new tax rate, although he admitted that he could not expect a better tax rate.

The United States is now a key market for European carmakers. Last year, nearly 750,000 cars were exported from Europe to the United States, accounting for nearly a quarter of the industry’s total exports.

Although the 15% tariff in the preliminary agreement on July 27 is much lower than the tariff previously imposed by US President Donald Trump, it is still significantly higher than the 2.5% tariff before Mr. Trump returned to the White House.

Hildegard Mueller, president of the German Automobile Association (VDA), warned that a 15% tax could cost the country's car companies billions of euros each year.

All major German automakers have now revised down their 2025 profit forecasts and are looking to reduce cost pressures. The US currently accounts for about 13% of Germany’s total car exports, according to figures.

Several automakers, including BMW and Mercedes-Benz, are seeking support from the German government or the EU to remove further trade barriers in the future.

Volkswagen is expected to be hit hard, as many of its models are made in Mexico and sold in the U.S. The company said its first-quarter results fell by about 1.3 billion euros ($1.5 billion) compared to the same period last year.

Meanwhile, sub-brands such as Porsche and Audi are also struggling, as they do not have manufacturing plants in the U.S. On July 28, Audi lowered its revenue and profit forecast for this year, although it still expects growth to return next year.

Volkswagen CEO Oliver Blume said the company is looking at the possibility of reaching a separate agreement with its US partner in exchange for additional investments in the US market.

At the EU-wide level, the European automotive industry is lobbying the European Commission (EC) to delay the transition to fully electric vehicles and provide policy support to stimulate the industry.

According to expert Ferdinand Dudenhoeffer, Director of the Center for Automotive Research (CAR), without policy support, many factories will have to cut production. In Germany alone, 70,000 jobs will be affected./.

According to VNA

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