Europe’s automakers expressed a mixed sense of relief and wariness on the day after a trade agreement was reached between the United States and the European Union on Sunday. The companies welcomed a reduction in U.S. tariffs on imported cars and parts, to 15 percent from 25 percent, but warned that even a lower levy would still hurt their businesses.
In addition, the European Union agreed to eliminate its tariffs on cars imported from the United States, while also introducing zero tariffs on a number of machinery products, a senior E.U. official said.
Automakers across Europe have booked billions of dollars in losses recently, as the effect of the 25 percent tariff imposed by President Trump in April began to bite. The industry has also suffered from a 50 percent U.S. tariff on steel and aluminum imports, which the Trump administration raised from 25 percent in June.
A 15 percent tariff on cars would “cost German automotive companies billions annually,” said Hildegard Müller, president of the German Association of the Automotive Industry. She called on negotiators to “find a solution” to resolve trade disputes between the U.S. and Canada and Mexico, where many European auto parts makers had set up to serve the U.S. market, only to see those supply chains “distorted and restricted” by the escalating trade war, Ms. Müller said.
Sigrid de Vries, director general of the European Automobile Manufacturers’ Association, said that U.S. tariffs, despite the reduction from previous levels, would “continue to have a negative impact not just for industry in the E.U. but also in the U.S.”
After an initial rally, major European carmakers’ turned sharply lower on Monday. Volkswagen, Porsche and BMW fell by more than 2 percent. Volvo Cars lost 3 percent.
Many European automakers have recently lowered or scrapped their financial forecasts on the murkier outlook for sales during Mr. Trump’s ever-shifting trade war.
Audi, the premium brand in Volkswagen’s lineup, on Monday joined the chorus of carmakers cutting their forecasts for revenue and profit, citing the impact of U.S. tariffs and restructuring costs.
Still, having more clarity about the tariffs they face was mostly welcomed by European automakers, which pushed European officials to come to an agreement with their American counterparts as trade talks appeared at an impasse. German car companies argued against the E.U. introducing retaliatory measures on U.S. goods, arguing that they would be doubly penalized because they produce and export vehicles in both regions.
For BMW and Mercedes-Benz, both of which produce cars in the United States for export, eliminating E.U. tariffs for American-built cars would be welcome. Audi, on the other hand, relies on exports from factories in Europe to serve its U.S. customers and stands to gain little from zero-tariffs rate.
“The import tariff reduction brings much-needed relief to the German automotive industry compared to the current status quo,” Mercedes said in a statement on Monday.
Volkswagen also welcomed the agreement. Last week, the company said that U.S. tariffs erased some $1.5 billion from its profit in the first half of the year. Stellantis, which owns Chrysler and Jeep as well as the European brands Peugeot and Fiat, said tariffs and factory shutdowns related to Mr. Trump’s trade policies contributed to a steep loss in the first half of the year. Volvo Cars, which is based in Sweden but owned by China’s Geely Holding, has taken an impairment charge of more than $1 billion on tariffs and production delays.
Jeanna Smialek contributed reporting from Brussels.
Melissa Eddy is based in Berlin and reports on Germany’s politics, businesses and its economy.
The post European Carmakers Welcome, and Worry, About U.S. Tariff Deal appeared first on New York Times.
