In a controversial move, former U.S. President Donald Trump has threatened to impose new 25% tariffs on European cars, aiming to push Americans to buy domestic vehicles and force Europeans to purchase more American-made cars. However, this plan carries strategic flaws that could ignite a trade war, threatening the automotive industry on both sides of the Atlantic.
1. Trump’s Tariff Threat: Will It Spark a Trade War in the Auto Industry?
Trump announced his intention to impose new 25% tariffs on European cars, claiming it would force Europeans to buy more American vehicles. However, experts doubt the effectiveness of this plan, especially given the massive European investments in the U.S.
2. Market Reaction: European Car Stocks Plummet by Up to 6.8%
Following Trump’s remarks, European car stocks saw a sharp decline. Shares of Stellantis dropped by 6.8%, Volkswagen by 5.6%, and Volvo by 6.5%. Meanwhile, Mercedes-Benz, BMW, and Porsche experienced losses ranging from 3.6% to 4.3%.
3. Trump’s Focus on German Cars: Personal Vendetta or Economic Strategy?
Trump seems to have a particular obsession with German cars. In 2018, he reportedly expressed his displeasure at seeing too many Mercedes-Benz cars on New York’s Fifth Avenue. He also questioned why Germans buy so few Chevrolets while Americans opt for BMWs. These statements reveal an economic vision that may be out of touch with reality.
4. Shocking Truth: Most European Cars Sold in the U.S. Are Made Locally!
In an ironic twist, many European cars sold in the U.S. are actually manufactured locally. For example, Mercedes-Benz vehicles are produced in Alabama, while BMW and Volkswagen operate massive factories in states like South Carolina and Tennessee.
5. Massive European Investments in the U.S.: How “German” Cars Support the American Economy
European automakers have made significant investments in the U.S. Volkswagen, for instance, has invested $10 billion in its U.S. operations, while BMW’s South Carolina plant is the largest in the world, producing 396,000 cars last year. These investments create thousands of American jobs and boost the local economy.
6. Global Mergers in the Auto Industry: Is “Nationality” Just an Illusion?
With the increasing globalization of the auto industry, determining a car’s “nationality” has become nearly impossible. For example, Chrysler, once one of America’s “Big Three,” is now owned by Italy’s Fiat and is part of the Netherlands-based Stellantis Group, which also manages American brands like Dodge, Jeep, and Ram Trucks.