EU car industry sees relief - and pain - in US trade deal
German auto companies
in particular were in for a great deal of export pain, as their share prices indicated.
Explore courses from Top Institutes in
Please select course:
Select a Course Category
Technology
Data Science
Healthcare
Others
MBA
Public Policy
Operations Management
Digital Marketing
Finance
Artificial Intelligence
Product Management
Data Science
Cybersecurity
Data Analytics
Leadership
Management
CXO
Degree
Project Management
Design Thinking
MCA
healthcare
Skills you'll gain:
Duration:
12 Weeks
MIT xPRO
CERT-MIT XPRO Building AI Prod India
Starts on
undefined
Get Details
Shares in
Porsche
,
Volkswagen
,
BMW
and
Mercedes-Benz
all lost more than three percent in trading Monday.
by Taboola
by Taboola
Sponsored Links
Sponsored Links
Promoted Links
Promoted Links
You May Like
Mountain Gear for Extreme Conditions
Trek Kit India
Learn More
Undo
The agreement eases "the intense uncertainty surrounding transatlantic trade relations in recent months", Europe's main auto group, the
European Automobile Manufacturers' Association
(ACEA), said in a statement welcoming the deal "in principle".
But it noted that the 15 percent US tariffs imposed on EU goods including cars "will continue to have a negative impact not just for industry in the EU but also in the US".
Live Events
German Chancellor Friedrich Merz said his country's economy -- the biggest in Europe -- would face "substantial damage" from the US tariffs agreed in the deal.
But, he said, "we couldn't expect to achieve any more".
The United States is a key market for European automakers, which last year sent nearly 750,000 of its cars to it, representing nearly a quarter of the sector's overall exports.
While the 15 percent rate is less than the 27.5 percent tariff US President Donald Trump imposed in April, it is far higher than the 2.5 percent levy European car manufacturers faced before Trump's return to the White House.
A German analyst, Stefan Bratzel, said it could be expected that US consumers would pay two-thirds of the price hike caused by the tariff, while car exporters would probably swallow the other third.
For those companies, "we might have to see whether it is possible for cost-cutting somewhere else," he said.
The 15 percent rate was similar to one reached in the deal the United States struck with Japan, another major car-exporting country.
Will cost industry 'billions'
For German carmakers, the United States represents around 13 percent of their exports.
In the short term, a 15 percent tariff will cost them "billions each year", said Hildegard Mueller, head of the national automobile manufacturers' association VDA.
The situation has forced all the automakers to lower their 2025 profit forecasts and to look for ways to alleviate the pressure.
BMW boss Oliver Zipse suggested in June that Europe could get rid of its own tariffs on imported vehicles made in the United States.
That could benefit his company, which last year exported 153,000 vehicles from the Americas, and imported into Europe 92,000 cars that were assembled in the United States.
Similarly, Mercedes is looking for help from the national or EU level.
"The deal reached between the EU and the US is a first, important step that needs to be followed by other measures," a company spokeswoman told AFP.
"Politicians need to keep working to get rid of obstacles getting in the way of free trade. We are counting on the EU and US to continue their constructive dialogue in the future," she said.
Volkswagen is also facing tariff hardship for vehicles it makes in Mexico for the US market, announcing that its first-quarter results had been shaved by around 1.3 billion euros ($1.5 billion) from a year earlier.
Its Porsche and Audi cars are also exposed as they have no production factories in the United States.
On Monday, Audi cut its revenue and profit targets for this year, though it said it expects them to rise next year.
Volkswagen CEO Oliver Blume has suggested reaching a side deal with the United States that would take into account investments his company could make in that country.
Volvo Cars, the Swedish carmaker owned by China's Geely Holding, has announced steep second-quarter losses because of tariffs.
The European auto sector is now lobbying the European Commission to delay the timetable for making the European car market go all-electric, and to provide some sort of industry stimulus.
With no help, European car factories, already facing uphill challenges, "will have to reduce production," said Ferdinand Dudenhoeffer, director of the Center for Automotive Research.
That, he said, could affect up to 70,000 jobs in Germany alone.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Hindustan Times
10 minutes ago
- Hindustan Times
Smartphones, pharma, energy escape 25% tariff
Almost half of India's $86.5 billion worth annual exports to the US could, for the time being be left out of President Donald Trump's 25% reciprocal tariff starting August 1, as comprehensive exemptions for electronics, pharmaceuticals, and energy products remain in place under existing White House orders. According to government data, India exported goods worth $86.51 billion to the US in FY25 and imported $45.33 billion of American merchandise that year The exemptions relate to Trump's executive order 14257 issued on April 2, which exempted broad categories including semiconductors, pharmaceuticals, energy products, and critical minerals from the punitive levies that the US president announced. A White House clarification on April 11 then expanded it to specifically include finished electronics like smartphones, laptops, and computers—providing crucial protection for commodities that India exports heavily to the US. According to government data, India exported goods worth $86.51 billion to the US in FY25 and imported $45.33 billion of American merchandise that year. Smartphones generated $10.9 billion in exports to the US during 2024-25, while pharmaceutical exports totalled $9.8 billion and petroleum products contributed $4.1 billion. Among these exports is Apple's iPhone models. India currently accounts for more than a fifth of global iPhone production and has surpassed China to become the top supplier of the device to the US market. In all, India exported goods worth $86.51 billion to the US in FY25 and imported $45.33 billion of American merchandise that year, government data has shown. 'Indian smartphones, medicines and petroleum products can still be exported to the US at zero tariffs, which is a major relief for many Indian exporters,' said Ajay Srivastava, founder of Global Trade Research Initiative. However, experts cautioned that it is not clear how long these exemptions will last, and whether they will continue for India – a country towards which Trump has taken an unusually hostile tone in recent days. 'There is not much clarity on whether previously spared sectors (globally), such as pharma, electronics, energy, and minerals, would continue to be exempted for India too,' said a report by Emkay Global Financial Services that delved into the impact of the 25% US tariff and an as-yet-unspecified penalty for importing Russian oil that Trump announced on Wednesday. According to the report, the sectoral vulnerabilities are not as bad as feared as long as the exemptions stay. Pharma and electronics have been exempt from any tariffs so far, while auto is better-placed than feared (as India barely exports vehicles to the US, while auto components may eventually benefit from tariffs on China, Canada, and Mexico). The electronics exemption proves particularly valuable given India's transformation under the production-linked incentive scheme. The ₹1.97 lakh crore programme for large-scale electronics manufacturing, launched in April 2020, has converted India from a net importer to the world's second-largest mobile phone manufacturer by value, generating ₹5.45 lakh crore in production and ₹2 lakh crore in exports during 2024-25. ₹1 lakh crore is equal to $12 billion. Traditional export sectors, however, face greater vulnerability, with experts saying traditional Indian merchandise such as gem and jewellery, textiles, and leather goods may take a hit. Apparel Export Promotion Council chairman Sudhir Sekhri acknowledged challenges while maintaining cautious optimism: 'The tariff of 25% is higher than what we expected but we should not be overly worried as long as Vietnam and Bangladesh tariffs are not revised downward from current levels.' The US represents a crucial market for Indian readymade garments, accounting for about 33% of India's total garment exports. Sekhri expects 'apparel exports to slow down till the announcement of an interim BTA, hopefully to conclude in October-December 2025.' Legal experts advised enhanced contract protection for the volatile period ahead. 'Indian exporters and importers must have watertight agreements for at least this financial year so that the risk in terms of currency fluctuation, price increase, tariff escalation, and contract cancellation are in place. Further, there must be a mandatory arbitration clause with the place of arbitration to be outside the US,' said Abhishek A Rastogi, founder of Rastogi Chambers. 'We await clarity on whether key sectors will remain exempt, as well as the announcement of a 'mini' trade deal in due course,' the Emkay report concluded.
Economic Times
12 minutes ago
- Economic Times
US employers slash hiring as Trump advances a punishing trade agenda
Agencies Economists have been warning that the rift with every U.S. trading partner will begin to appear this summer and the Friday jobs report appeared to sound the bell. WASHINGTON: U.S. hiring is slowing sharply as President Donald Trump's erratic and radical trade policies paralyze businesses and raise doubts about the outlook for the world's largest economy. The Labor Department reported Friday that U.S. employers added just 73,000 jobs last month, well short of the 115,000 forecasters had expected. Worse, revisions shaved a stunning 258,000 jobs off May and June payrolls. And the unemployment rate ticked up to 4.2% as Americans dropped out of the labor force and the ranks of the unemployed rose by 221,000. "A notable deterioration in U.S. labor market conditions appears to be underway,'' said Scott Anderson, chief U.S. economist at BMO Capital Markets. "We have been forecasting this since the tariff and trade war erupted this spring and more restrictive immigration restrictions were put in place. Overall, this report highlights the risk of a harder landing for the labor market.'' Economists have been warning that the rift with every U.S. trading partner will begin to appear this summer and the Friday jobs report appeared to sound the bell. "We're finally in the eye of the hurricane," said Daniel Zhao, chief economist at Glassdoor. "After months of warning signs, the July jobs report confirms that the slowdown isn't just approaching-it's here." U.S. markets recoiled and the jobs report and the Dow tumbled more than 600 points at the opening bell Friday. The revelations in the new data raise questions about the health of the job market and the economy as President Donald Trump pushes forward with an unorthodox overhaul of American trade policy. Trump has discarded decades of U.S. policy that had favored fewer barriers and ever-freer trade. Instead, Trump is imposing hefty import taxes - tariffs - on products from almost every country on earth. Trump believes the levies will bring manufacturing back to America and raise money to pay for the massive tax cuts he signed into law July 4. Mainstream economists say the cost of the tariffs will be passed along to Americans, both businesses and households. That has already begun to happen. Walmart, Procter & Gamble, Ford, Best Buy, Adidas, Nike, Mattel, Shein, Temu, Stanley Black & Decker, have all announced, or said that they would hike prices, due to U.S. tariffs. Trump has also sowed uncertainty in the erratic way he's rolled the tariffs out - announcing, then suspending them, then coming up with new ones. Overnight, Trump signed an executive order that set new tariffs on a wide swath of U.S. trading partners to that go into effect on Aug. 7., and that arrived after a flurry of unexpected tariff-related actions this week. "There was a clear, significant, immediate, tariff effect on the labor market and employment growth essentially stalled, as we were dealing with so much uncertainty about the outlook for the economy and for tariffs," said Blerina Uruci, chief U.S. economist for the brokerage T. Rowe Price. Still, Uruci said the data suggests we could be past the worst, as hiring actually did pick up a bit in July from May and June's revised and depressed levels. "I'm not overly pessimistic on the U.S. economy based on this morning's data," she said, though she does think that hiring will remain muted in the coming months as the number of available workers remains limited due to reduced immigration and an aging population. Trump has sold the tariffs hikes as a way to boost American manufacturing, but factories cut 11,000 jobs last month after shedding 15,000 in June and 11,000 in May. The federal government, where employment has been targeted by the Trump administration, lost 12,000 jobs. Jobs in administration and support fell by nearly 20,000. Healthcare companies added 55,400 jobs last month - accounting for 76% of the jobs added in July and offering another sign that recent job gains have been narrowly concentrated. The department originally reported that state and local governments had added 64,000 jobs in education in June. After the revisions released Friday, that number fell to below 10,000. After the big revisions for May and June, Labor Department data show that the U.S. economy has generated an average of just 85,000 jobs a month this year, barely half last year's average of 168,000 and well below an average 400,000 from 2021-2023 as the economy rebounded from COVID-19 lockups. The weak jobs data makes it more likely that Trump will get one thing that he most fervently desires: A cut in short-term interest rates by the Federal Reserve, which often -- though not always -- can lead to lower rates for mortgages, car loans, and credit cards. Fed Chair Jerome Powell and other Fed officials have repeatedly pointed to a healthy job market as a reason that they could take time to evaluate how Trump's tariffs were affecting inflation and the broader economy. Now that assessment has been undercut and will put more pressure on the Fed to reduce borrowing costs. Wall Street investors sharply raised their expectations for a rate cut at the Fed's next meeting in September after the report was released. On Wednesday, the Fed left its key rate unchanged for the fifth straight meeting and Powell signaled little urgency to reduce rates anytime soon. He said the "labor market is solid" with "historically low unemployment." But he also acknowledged there is a "downside risk" to employment stemming from the slow pace of hiring that was evident even before Friday's weaker numbers. The current situation is a sharp reversal from the hiring boom of just three years ago when desperate employers were handing out signing bonuses and introducing perks such as Fridays off, fertility benefits and even pet insurance to recruit and keep workers. The rate of people quitting their jobs - a sign they're confident they can land something better - has fallen from the record heights of 2021 and 2022 and is now below where it stood before the pandemic. Drees Homes, a homebuilder based outside Cincinnati in Fort Mitchell, Kentucky, has hired about 50 people over the past year, bringing its workforce to around 950. Pamela Rader, Drees' vice president for human resources, it's "gotten a little bit easier'' to find workers. A couple of years ago, Rader said jobseekers were focused on getting more pay. Now, she said, they emphasize a better work-life balance, stable employment and prospects for advancement.
&w=3840&q=100)
Business Standard
12 minutes ago
- Business Standard
Wall St selloff sparked by Trump tariffs, Amazon results, weak payrolls
Wall Street's main indexes declined sharply on Friday as new US tariffs on dozens of trading partners and Amazon's unimpressive earnings weighed on sentiment, while a weaker payrolls report added to risk aversion. Hours ahead of the tariff deadline, President Donald Trump signed an executive order imposing duties on US imports from countries including Canada, Brazil, India and Taiwan. Data showed US job growth slowed more than expected in July while the prior month's data was revised sharply lower, pointing to a sharp moderation in the labor market. "This was a pretty disappointing report ... markets are getting a little bit more worried about the state of the labor market in the aftermath of today's report," said BeiChen Lin, senior investment strategist at Russell Investments. Following the data, traders have raised their bets for a September interest rate cut to 81.9 per cent, according to CME's FedWatch tool. At 9:52 a.m. ET, the Dow Jones Industrial Average fell 633.77 points, or 1.44 per cent, to 43,491.55, the S&P 500 lost 107.59 points, or 1.70 per cent, to 6,231.80 and the Nasdaq Composite lost 483.70 points, or 2.29 per cent, to 20,638.74. The S&P 500 and the Nasdaq fell to a more than two-month low each, while the Dow slipped to an over one-month low. The CBOE Volatility index, also known as Wall Street's fear gauge, jumped to a near six-week high and was last up 20.66 points. Eight of the 11 S&P 500 sector indexes declined, led by consumer discretionary, which was down 3.4 per cent as Amazon slid 6.7 per cent. The company's growth in its cloud computing unit failed to impress investors, in contrast to robust gains reported by AI-focused rivals Alphabet and Microsoft. Technology and communication services indexes fell 1.9 per cent and 1.5 per cent, respectively. Apple posted its current-quarter revenue forecast well above Wall Street estimates, but CEO Tim Cook warned US tariffs would add $1.1 billion in costs over the period. The stock edged 0.2 per cent lower. Most major megacap stocks fell, with Nvidia down 3.1 per cent, Tesla falling 2.6 per cent, Meta Platforms down 2.5 per cent, and Alphabet losing 1.4 per cent. Financials fell 2.2 per cent, with Coinbase Global falling 16.2 per cent after the crypto exchange reported a drop in adjusted profit for the second quarter. Industrial tools supplier WW Grainger dropped 9.2 per cent after slashing its forecast for annual profit. Trump said on Friday the Federal Reserve's board should assume control if the central bank's chair, Jerome Powell, continues to refuse to lower interest rates. Powell, despite pressure from Trump to cut rates, has indicated the central bank was in no rush to do so. The day's sharp losses put the S&P 500 and the Nasdaq on track for weekly losses, offsetting the week's earlier gains on signs of economic resilience, AI boost, and key US trade agreements with top partners such as the European Union and South Korea. Declining issues outnumbered advancers by a 2.93-to-1 ratio on the NYSE, and by a 4.43-to-1 ratio on the Nasdaq. The S&P 500 posted six new 52-week highs and 18 new lows, while the Nasdaq Composite recorded 8 new highs and 131 new lows.
