Reuters reported that on March 27, stocks of a number of German automakers and components suppliers fell in the trading session before the opening time, after US President Donald Trump announced a 25% tax rate on imported cars. The move could further hurt Germany's already struggling auto industry.
According to pre-opening data from Lang & Schwarz, BMW's stock fell 2.3%, Daimler Truck fell 1.9%, while Continental's stock fell 3.9%.
The German Automobile Industry Association (VDA) criticized the new tax rate, calling it a danger signal for free trade based on the law, and warned that this policy would harm not only companies but also the global supply chain.
VDA President Hildegard Mueller expressed his hope that the US and EU will soon reach a bilateral agreement to minimize the negative impact of the 25% tariff that Mr. Trump has just applied.
However, according to research by the World Economic Institute Kiel (IfW), Germany is not the country most severely affected. The FAZ newspaper quoted IfW's estimate as saying that Germany's real GDP in the first year after the tax will decrease by 0.18%, while Mexico will suffer a decline of 1.81% and Canada will decrease by 0.6%.
IfW trade economist Julian Hinz said that European car exports will inevitably suffer damage, but the impact will not be too serious.
The reason is that car manufacturers often produce right at or near the consumption market. For example, BMW, Mercedes-Benz and Volkswagen all have assembly plants in the US, helping to reduce the impact of the new tax rate.
