EU car industry sees relief - and pain - in U.S. trade deal
By Léa PERNELLE and Taimaz SZIRNIKS
The car industry in the EU on Monday viewed the trade deal struck with the United States as a de-escalation -- but one that still puts sand in its gearbox.
German auto companies in particular were in for a great deal of export pain, as their share prices indicated.
Shares in Porsche, Volkswagen, BMW and Mercedes-Benz all lost more than three percent in trading Monday.
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 U.S. 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 U.S."
German Chancellor Friedrich Merz said his country's economy -- the biggest in Europe -- would face "substantial damage" from the U.S. 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 U.S. 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 U.S. 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.
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 U.S. to continue their constructive dialogue in the future," she said.
Volkswagen is also facing tariff hardship for vehicles it makes in Mexico for the U.S. 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.
© 2025 AFP
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ROME (AP) -- Stealth submarines fitted with space-shooting lasers, supply-chain sabotage and custom-built attack satellites armed with ion thrusters. Those are just some of the strategies Chinese scientists have been developing to counter what Beijing sees as a potent threat: Elon Musk' s armada of Starlink communications satellites. Chinese government and military scientists, concerned about Starlink's potential use by adversaries in a military confrontation and for spying, have published dozens of papers in public journals that explore ways to hunt and destroy Musk's satellites, an Associated Press review found. Chinese researchers believe that Starlink -- a vast constellation of low-orbit satellites that deliver cheap, fast and ubiquitous connectivity even in remote areas -- poses a high risk to the Chinese government and its strategic interests. That fear has mostly been driven by the company's close ties to the U.S. intelligence and defense establishment, as well as its growing global footprint. "As the United States integrates Starlink technology into military space assets to gain a strategic advantage over its adversaries, other countries increasingly perceive Starlink as a security threat in nuclear, space, and cyber domains," wrote professors from China's National University of Defense Technology in a 2023 paper. Chinese researchers are not the only ones concerned about Starlink, which has a stranglehold on certain space-based communications. Some traditional U.S. allies are also questioning the wisdom of handing over core communications infrastructure -- and a potential trove of data -- to a company run by an unpredictable foreign businessman whose allegiances are not always clear. 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It has won billions in contracts to provide launch services for NASA missions and military satellites, recuperate astronauts stranded at the International Space Station and build a network of spy satellites for the National Reconnaissance Office. Starlink's space dominance has sparked a global scramble to come up with viable alternatives. But its crushing first-mover advantage has given SpaceX near monopoly power, further complicating the currents of business, politics and national security that converge on Musk and his companies. Starlink dominates space Since its first launches in 2019, Starlink has come to account for about two-thirds of all active satellites, according to Jonathan McDowell, an astronomer at the Harvard-Smithsonian Center for Astrophysics, who writes a newsletter tracking satellite launches. SpaceX operates more than 8,000 active satellites and eventually aims to deploy tens of thousands more. 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Amazon billionaire Jeff Bezos has taken aim at rival Musk with Project Kuiper, which launched its first batch of internet satellites into orbit in April. So far Amazon has just 78 satellites in orbit, with 3,232 planned, according to McDowell, and London-based Eutelstat OneWeb has around 650 satellites in orbit, a fraction of the fleet it had initially planned. The European Union is spending billions to develop its own satellite array -- called the IRIS2 initiative -- but remains woefully behind. EU officials have had to lobby their own member states not to sign contracts with Starlink while it gets up and running. "We are allies with the United States of America, but we need to have our strategic autonomy," said Christophe Grudler, a French member of the European Parliament who led legislative work on IRIS2. "The risk is not having our destiny in our own hands." China has been public about its ambition to build its own version of Starlink to meet both domestic national security needs and compete with Starlink in foreign markets. In 2021, Beijing established the state-owned China SatNet company and tasked it with launching a megaconstellation with military capabilities, known as Guowang. In December, the company launched its first operational satellites, and now has 60 of a planned 13,000 in orbit, according to McDowell. Qianfan, a company backed by the Shanghai government, has launched 90 satellites out of some 15,000 planned. The Brazilian government in November announced a deal with Qianfan, after Musk had a scorching public fight with a Brazilian judge investigating X, who also froze Space X's bank accounts in the country. Qianfan is also targeting customers in Kazakhstan, Malaysia, Oman, Pakistan and Uzbekistan and has ambitions to expand across the African continent, according to a slide presented at a space industry conference last year and published by the China Space Monitor. Russia's invasion of Ukraine supercharges concerns Concerns about Starlink's supremacy were supercharged by Russia's 2022 full-scale invasion of Ukraine. The war was a turning point in strategic thinking about Starlink and similar systems. Ukraine used the Starlink network to facilitate battlefield communications and power fighter and reconnaissance drones, providing a decisive ground-game advantage. At the same time, access to the satellites was initially controlled by a single man, Musk, who can -- and did -- interrupt critical services, refusing, for example, to extend coverage to support a Ukrainian counterattack in Russia-occupied Crimea. U.S.-led sanctions against Moscow after the full-scale invasion also curtailed the availability of Western technology in Russia, underscoring the geopolitical risks inherent in relying on foreign actors for access to critical infrastructure. "Ukraine was a warning shot for the rest of us," said Nitin Pai, co-founder and director of the Takshashila Institution, a public policy research center based in Bangalore, India. "For the last 20 years, we were quite aware of the fact that giving important government contracts to Chinese companies is risky because Chinese companies operate as appendages of the Chinese Communist Party. Therefore, it's a risk because the Chinese Communist Party can use technology as a lever against you. Now it's no different with the Americans." Nearly all of the 64 papers about Starlink reviewed by AP in Chinese journals were published after the conflict started. Assessing Starlink's capabilities and vulnerabilities Starlink's omnipresence and potential military applications have unnerved Beijing and spurred the nation's scientists to action. In paper after paper, researchers painstakingly assessed the capabilities and vulnerabilities of a network that they clearly perceive as menacing and strove to understand what China might learn -- and emulate -- from Musk's company as Beijing works to develop a similar satellite system. Though Starlink does not operate in China, Musk's satellites nonetheless can sweep over Chinese territory. Researchers from China's National Defense University in 2023 simulated Starlink's coverage of key geographies, including Beijing, Taiwan, and the polar regions, and determined that Starlink can achieve round-the-clock coverage of Beijing. "The Starlink constellation coverage capacity of all regions in the world is improving steadily and in high speed," they concluded. In another paper -- this one published by the government-backed China Industrial Control Systems Cyber Emergency Response Team -- researchers mapped out vulnerabilities in Starlink's supply chain. "The company has more than 140 first-tier suppliers and a large number of second-tier and third-tier suppliers downstream," they wrote in a 2023 paper. "The supervision for cybersecurity is limited." Engineers from the People's Liberation Army, in another 2023 paper, suggested creating a fleet of satellites to tail Starlink satellites, collecting signals and potentially using corrosive materials to damage their batteries or ion thrusters to interfere with their solar panels. Other Chinese academics have encouraged Beijing to use global regulations and diplomacy to contain Musk, even as the nation's engineers have continued to elaborate active countermeasures: Deploy small optical telescopes already in commercial production to monitor Starlink arrays. Concoct deep fakes to create fictitious targets. Shoot powerful lasers to burn Musk's equipment. Some U.S. analysts say Beijing's fears may be overblown, but such assessments appear to have done little to cool domestic debate. One Chinese paper was titled, simply: "Watch out for that Starlink."
