US Tariffs Will Cost German Automakers $7 Billion A Year

President Donald Trump has less than 90 days to decide whether to impose tariffs of up to 25% on vehicle imports, a threat that has unnerved automakers in the industrial powerhouse of Germany.
The tariffs would cost Volkswagen(VLKAF) €2.5 billion ($2.8 billion) a year in profit, according to Evercore
ISI. BMW (BAMXF) earnings would be reduced by €1.7 billion ($1.9 billion) and Daimler (DDAIF) would take a €2 billion ($2.3 billion) hit.
Volkswagen CEO Herbert Dies told the Financial Times the estimate is about right.
“In the worst-case situation, that would probably be close to the real figure,” he told the newspaper in an interview. BMW and Daimler, the owner of Mercedes-Benz, declined to comment on the figures.
With cars making up roughly 30% of all German exports to the United States, the broader economic impact promises to be severe.
Germany’s Ifo Institute for Economic Research said last week that 25% tariffs would send annual German car exports to the United States plummeting by about 50% within a decade, from €34 billion ($38 billion) to €17 billion ($19 billion).
Last year, the institute calculated that the tariffs would knock 0.16% of Germany’s GDP.
Almost half of all cars sold in the United States are made outside the country, mostly in Mexico, Canada and Japan.
Ifo estimated that Mexico would see its GDP decline by 0.39% as a result of the US tariffs. Canada’s GDP would drop 0.23% while Japan’s would fall 0.1%.
Vehicles currently accounts for 10% of total trade between the two regions, according to ACEA, the European Automobile Manufacturers Association. The jobs of more than 13 million people, or 6% of all employees in the European Union, depend on the industry.

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