The VDA – Germany’s powerful automotive industry representative body – has warned of the dangers of tariffs on international trade and said that they risk negative effects on the world economy as well as fuelling price inflation in the US.
US President Donald Trump has proposed widespread ‘reciprocal’ US import tariffs on countries that impose import duties on US exports.
VDA President Hildegard Müller warned that new tariffs risk retaliatory tariffs. “If tariffs are responded to with counter-tariffs or other measures, a spiral is set in motion that in particular also means that consumers end up having to pay more. Instead of fighting inflation, as promised, US President Donald Trump is fuelling inflation in the USA,” she said.
“Additional tariffs would directly affect the US economy - and make products more expensive for US consumers. Different tariff levels have partly developed over time and there is no rule that tariffs should be of the same amount. The legal basis for reciprocal tariffs is completely unclear.”
Müller also added some detail: “While the customs duty for importing cars is 10% in the EU and 2.5% in the USA, the USA charges 25% on imports of pick-up trucks, which are popular in the USA. It is wrong to describe the European sales tax as a barrier to trade, because the import sales tax that has to be paid at the border on import is exactly the same as the sales tax that has to be paid on a domestic purchase.”
She went on to warn that if President Trump were to increase tariffs on cars from the EU, this would have a negative impact on exports from the EU to the US and described the threat as a ‘provocation’. “It would also be more expensive for consumers - all of which would cost growth and prosperity - on both sides of the Atlantic. The tariff level of 25% currently mentioned by President Trump is a provocation,” she said.
She also called for more dialogue. “The EU should enter into dialogue with the USA while the 'short-term reviews' are still ongoing. In negotiations on an agreement between the EU and the USA, the various tariffs and other trade barriers could be considered bilaterally. This would take mutual interests into account.
“The automotive industry would also welcome discussions about regulatory cooperation, standards and certification - this would bring benefits for both sides of the Atlantic. The EU must act in a united and strong manner - and make it clear again and again that an escalation will only produce losers."
The VDA also highlights the economic importance of German investment in the US. Of the more than 900,000 vehicles produced in the US in 2023, it says around half were exported to markets all over the world. VDA says that in 2023, cars worth some €8bn were exported from the USA to Germany alone (193,000 cars). This, the VDA point out, puts cars "Made in the US" in first place in German import statistics in terms of value (followed by Spain, the Czech Republic and Slovakia).
“President Trump can therefore be satisfied with this export success - and should not make trade more difficult,” Müller adds.
VDA estimates that the German automotive industry employs around 138,000 people in the US, with 48,000 working for automobile manufacturers and another 90,000 for German parts suppliers.
