The climate has heated up again, and once again it was Donald Trump who stirred the waters. The American president announced that from this week, European imports of cars and trucks will be hit by 25% tariffs. A move justified by the US administration accusing Brussels of not respecting its commitments, but which in Europe was immediately seen as a new rupture, capable of spreading far beyond the automotive sector.
PRESSURE FROM ECONOMISTS FOR A EUROPEAN RESPONSE
In Berlin, the signal arrived quickly. A second blow, after that on troops, missiles, and defense, perhaps part of the same strategy. The president of the German Institute for Economic Research in Berlin (Deutsches Institut für Wirtschaftsforschung, DIW), Marcel Fratzscher, did not use diplomatic tones: in his view, Europe cannot continue to take it lying down. More than a surprise, the umpteenth American move would fit into “a now familiar pattern,” in which “Europe’s willingness to compromise ends up becoming a weakness.”
Fratzscher also links this development to the internal political context of the United States. “In a complicated domestic phase, trade tensions can become a useful tool to strengthen support,” he told Handelsblatt. Hence the call to change approach: targeted responses, “also on the fiscal front,” and “a firmer negotiating line” to avoid always remaining on the defensive.
The European Commission, for now, maintains more measured tones. From Brussels, there is continued talk of cooperation and balanced relations, but with a caveat: if the new measures violate existing agreements, the Union is ready to react.
THE RISK OF AN ECONOMIC SLOWDOWN
Meanwhile, research centers are starting to do the math. The president of the ifo Institute in Munich, Clemens Fuest, already foresees the effects of a possible hardening: “weaker growth and less favorable prospects, especially if it should enter a spiral of retaliations.”
The risk evoked is that of a real trade war, with consequences that would go far beyond the short term. For Germany, in particular, the worst-case scenario includes “a possible economic contraction in 2026.” And it is not hard to understand why: the automotive industry, already facing profound transformations, would face an additional obstacle.
Estimates from the Kiel Institute for the World Economy (Institut für Weltwirtschaft, IfW) provide a more concrete measure of the impact: production losses in the order of tens of billions, with tangible effects also on gross domestic product. Numbers that, inserted into an already weak growth context, risk weighing significantly.
THE AUTOMOTIVE INDUSTRY IN THE CROSSHAIRS
The most exposed sector remains the automotive one. According to the Center Automotive Research (CAR) in Bochum, the tariff increase could translate into additional costs for German manufacturers amounting to about 2.5 billion euros per year, not counting the repercussions on exports from other European countries. For Ferdinand Dudenhöffer, head of the study center, the reading is quite clear: “even if formally the measures concern the entire Union, which is competent for tariffs, the real target ends up being Germany, which sells a significant share of its cars in the United States.”
Not all companies, however, start from the same position, experts from the Bochum institute observe. BMW and Mercedes-Benz, thanks to plants already present in the United States, have a margin of protection: most of the most demanded models, such as SUVs, are produced directly there. More exposed, however, are Porsche and Audi, which could be pushed to accelerate projects to produce overseas.
In the medium term, this could translate into a further push towards relocation, with effects that risk reflecting on the German industrial structure.
PUSHES FOR TRADE DIVERSIFICATION
Reactions are not all aligned. The Association of the Automotive Industry (Verband der Automobilindustrie, VDA), led by Hildegard Müller, warns especially of “systemic consequences”: the costs, she notes, would not remain confined to companies but would also involve American consumers.
And there are those who urge not to act impulsively, especially on the political front. Jens Südekum, advisor to the Social Democratic Finance Minister (and Vice-Chancellor) Lars Klingbeil, suggests “taking time,” recalling that “in the past, similar announcements have sometimes been scaled back or withdrawn shortly after.” Within government circles, many believe that Friedrich Merz’s recent public statements against Trump were unwise and may have triggered the president’s double reaction.
From the business side, another priority emerges: diversification. The German Chamber of Commerce and Industry (Deutscher Industrie- und Handelskammertag, DIHK) insists on the need to strengthen relations with other partners while maintaining a united front towards the United States. Among the options on the table, agreements such as the one with Mercosur could play an increasing role.
However, no one harbors too many illusions. Between the loss of the Russian market, the fading of the Chinese one, and risks in the Middle East, a further hardening of relations with Washington risks being the final blow. Germany cannot afford a clash with the US: not on the military front and even less on the economic one. The transatlantic relationship remains irreplaceable in the short term, but its fragility condemns the German economy to a phase of deep uncertainty.
