Posted on 03/27/2025 3:37:40 PM PDT by SoConPubbie
The atomic sledgehammer that President Trump just delivered to the German auto industry simply cannot be overemphasized. A 25% tariff on imported cars and car parts completely negates hundreds of billions in pre-positioned investment dollars by German auto companies in Mexico. [Executive Order Here]
To give scale to the impact on Germany, consider that German automakers currently have 330 automotive suppliers in Mexico according to information from VDA. Audi (a subsidiary of Volkswagen) has no U.S. production sites; every Audi sold in America will be subject to a 25% tariff. The Audi brand access to the U.S. market was/is 100% dependent on Mexico, including for manufacturing the Q5 SUV, its top-selling U.S. model.
According to prior reporting from Politico, “Volkswagen’s most popular model for American consumers is the Tiguan, an SUV that is entirely manufactured in Mexico. The German automaker sold over 30,000 of the vehicles in the final quarter of last year, a nearly 50 percent year-over-year increase.” But wait, it gets worse….
French-Italian-American automaker Stellantis is the most exposed of Europe’s automakers as it makes Jeep and RAM models in Mexico.
The tariffs will make European automakers’ Mexican factories completely redundant. They could make them in Germany for the same tariff impact. Making them in Mexico is now useless. They were only being made/assembled in Mexico to gain access to the U.S. market without tariffs.
This reality will push all EU automakers to shift production to the U.S. There could also be an explosion in UAW membership depending on where in the USA the EU car companies end up manufacturing.
The auto industry is only one industry, but it is a huge economic driver for multiple countries, especially those countries who depend on access to the U.S. market in order to sell their cars and trucks.
German automakers will need three things, quickly: (1) Subsidies from German govt to help offset the impact of tariffs [Short term 2-5 years]. (2) Shift production of autos for U.S market into USA [Make in USA]. (3) Interim access to new markets to help offset the anticipated drop in demand [think Russia without sanctions]. Each of these facets plays into current geopolitics.
That’s mainly just the German impact. Then overlay Canada and Mexico (big impact), along with South Korea and Japan (lesser impact due to pre-positioned manufacturing/assembly in the USA). The auto-tariffs carry a huge economic outcome around the globe.
[Source]
Europe – “European Commission President Ursula von der Leyen responded quickly to a decision by United States President Donald Trump to slap a 25 percent tariff on auto imports.
The tariffs, which Trump said will take effect April 3, are a heavy blow for the European car industry and represent the largest escalation yet in Trump’s multi-fronted trade war, which is expected to have severe global economic consequences.
“I deeply regret the US decision to impose tariffs on European automotive exports,” von der Leyen said in a statement released late Wednesday evening. “Tariffs are taxes — bad for businesses [and] worse for consumers equally in the US and the European Union.”
She said Europe would assess the tariffs, and anticipated that further measures would arrive from the White House in the coming days. Trump has stepped back from implementing tariffs on America’s allies and adversaries several times since his Jan. 20 inauguration.
“We’re signing today,” Trump said of the protectionist tariffs. “It goes into effect April 2. We start collecting on April 3.”
While von der Leyen’s language was guarded, she left little doubt that the EU is prepared to retaliate.
“The EU will continue to seek negotiated solutions, while safeguarding its economic interests,” she said. “As a major trading power and a strong community of 27 Member States, we will jointly protect our workers, businesses and consumers across our European Union.” (More)
Thought? Or did you die during ‘Turnip Winter?’
Our criminal establishment learned to hate America s over the years and now we are going to take back their stolen cheese!
Trump should stop using Tariff so much and just use the phrase “Fair Trade” and redirect details questions to his Trade representatives & those preparing the External Revenue Service. And everytime he is asked about this he could say something like this:
“I want Fair Trade. You are getting into details that [names] who handle trade and External Revenue Service plans can explain more details for those who are trying to understand the process for implementing Fair Trade.”
Then if they ask him again he should emphasize “don’t you believe in Fair Trade for America? what have you done to try to bring about Fair Trade? why has my predecessor failed on this? We want Fair Trade with every country. We’re going to achieve Fair Trade. Talk to the experts. Talk with the other countries’ governments on what they are doing to try to achieve fair trade with the USA. Now some of them aren’t interested in Fair Trade. And many of those not wanting fairness for America will lie about this or be otherwise deceitful. It would be better if they are honest about this.”
No one told these dopey Germans to spend a billion dollars to build a BMW plant in Mexico in 2020 specifically to export cars into the US...now those chickens are coming home to roost.
No one told these dopey Germans to spend a billion dollars to build a BMW plant in Mexico in 2020 specifically to export cars into the US...now those chickens are coming home to roost.
the party is over!
Trump negotiating again.
We’ll see where this all settles.
Good comment upthread about the Germans having to outsource because
they don’t have enough power to manufacture their own parts.
Seems like between the muzzies, chinese, russians and Trump - the euros
could be looking at a bit of a sticky wicket.
Maybe some of them might start thinking about how things could run better without the EU.
I would say Donald’s got them by the balls - but they don’t have any.
When you’re running a huge trade surplus, your threats of retaliation ring rather hollow. They’re always going to be able to hurt you more than you can hurt them.
Better open a bunch of factories in the US.
He’s got ‘em by their short hairs.
We could afford it. At the end of WWII, the US comprised 50% of the entire world's economy.
The policy worked and they got back on their feet by about 1960 or certainly by the mid 60s. We didn't then withdraw all that financial support when we should have. The currency peg was gotten rid of by Nixon when he took us off the gold standard but the unequal trade deals and massively subsidizing their defense did not end...until now....they've gotten used to Uncle Sam paying their bills for them. They're going to have to get used to paying their own way.
The EU is nuts. I have no plans on purchasing a car from a European manufacturer anyway - although I was tempted to pick up an Audi three years ago. I also heard Ferrari is raising US prices by 10% which equates to an increase of $50K on a new car. Don’t they realize the schlubs buying those cars are multi-millionaires and $50K is nothing to them. Bottom line...move the factories here or pound sand.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.