German Carmaker Stocks Fall as Trump Threatens 30% EU Tariffs

U.S. President Donald Trump announced a 30% tariff on European Union imports starting August 1, 2025, without exemptions for the auto industry, which already faces a 27.5% duty. This move has caused shares of major German automakers like Volkswagen, BMW, Mercedes-Benz, and Porsche to drop between 1.3% and 1.6% amid fears of escalating trade tensions and potential retaliatory tariffs from the EU. Mercedes-Benz, which manufactures 35% of its U.S.-sold vehicles in Tuscaloosa, Alabama, expects significant price increases despite currently holding 2025 model prices steady. Porsche, fully reliant on European production, has seen U.S. sales rise due to pre-tariff inventory but has absorbed costs through price protection, likely passing tariff expenses on to customers in the future. The tariffs threaten key European export sectors including vehicles, pharmaceuticals, wines, and luxury goods, potentially disrupting global supply chains and weighing heavily on European equities. The EU, representing a major trade partner to the U.S., remains hopeful for negotiations but is prepared to retaliate if no agreement is reached.