Germany says it “doesn’t give in” and says Europe “must respond firmly as it targets imported cars and auto parts with a 25% tax on the latest tariffs.
Other major global economies have vowed to retaliate, France has branded the move as “very bad news,” Canada calls it a “direct attack,” and China has accused Washington of violating international trade rules.
Earlier on Thursday, Porsche, Mercedes and BMW stocks in Frankfurt fell sharply along with French company Stellantis, the maker of Jeep, Peugeot and Fiat.
Trump threatened to impose “a much larger” tariffs if Europe worked with Canada to do what he calls “economic harm.”
The tariffs on fresh cars will come into effect on April 2nd, and the fees for vehicles importing companies will come into effect the following day. Taxes on parts are expected to begin after May.
Trump has long said tariffs have been part of the drive to help with manufacturing, and if cars were built in America, “there is absolutely no tariffs.”
Customs duties are taxes charged on goods imported from other countries.
This measure can protect domestic companies, but it also raises costs for companies that rely on parts from overseas.
Companies that bring foreign countries to the country pay taxes to the government. Companies may choose to pass some or all of the tariff costs to their customers.
The US imported approximately 8 million cars last year. It accounts for about $240 billion (£186 billion) in trade, accounting for about half of its total revenue.
Mexico is the leading US car supplier, followed by South Korea, Japan, Canada and Germany.
According to Anderson Economic Group, analysts estimate that tariffs on parts only in Canada and Mexico could rise between $4,000 and $10,000 depending on the vehicle.
German Economy Minister Robert Habeck said the European Union “must respond well.”
“It must be clear that we will not succumb to America. We need to show strength and confidence,” he added.
France supports this joint approach, with Finance Minister Eric Lombard saying that Europe’s “only solution” is to retaliate with tariffs on US products.
“We are in a targeted situation. We accept that. In that case, this will never stop or respond,” added Lombard.
He emphasized the need to “realign the playing field” as the United States was “forced to negotiate.”
Canadian Prime Minister Mark Carney called tariffs a “direct attack” on his country and its automotive industry, adding that “harming us” is being debated, but trade options are being discussed.
In the UK, automotive industry group SMMT said Trump’s tariff announcement on Wednesday was “not surprising, but still disappointing.”
Unipart founder John Neal said Trump’s tariffs were “a gift to China.”
Meanwhile, China accused Trump of violating World Trade Organization rules.
“There are no winners in trade wars or tariff wars. The country’s development and prosperity has not been achieved by imposing tariffs,” a spokesman for the Ministry of Foreign Affairs said.
Japan has warned that there will be a “major impact” on the economic ties that it shares with the United States. A government spokesman described the measure as “very disappointing” and said authorities had sought the US for an exemption.
In South Korea, one day before its latest collection, Hyundai announced that it would invest $21 billion (£16.3 billion) in the US and build a new steel factory in Louisiana.
Trump welcomed the investment as a “clear demonstration that tariffs work very strongly.”
Bosch – based in Germany – says he is confident in the “long-term potential” of the North American market and will continue to expand his business there.
