Will Trump tariffs cause a red stop light for the German auto industry?
Manufacturers in Germany are taking a hit from a combination of US tariffs and the end of the European Central Bank’s super-stimulus programme. Although luxury brands may be able to pass on higher costs, many businesses face slowing car sales, slashed profits and increased credit risks. It’s not only Germany that’s facing such issues. The world’s automotive sector is straining under the weight of US tariffs on steel and aluminium.
Theo Smid, Atradius' economist gives us his summary of the tariff implications:
- So how will President Trump’s latest proposed tariff, of 25% on all cars and car parts imported into the US, affect the industry?
- Signs are not good. The ten-year period of growth, with record-breaking revenues for car makers and suppliers, has ground to a sudden halt.
- Manufacturers worldwide have reported supply chain disruption. Workers have been laid off.
- To help mitigate the effects of US tariffs, global manufacturers are increasingly focusing on local suppliers and markets. But until these supply chains are developed, the manufacturers will face a rocky road.
