CEO's Perspective on US Auto Tariffs by Porsche and Mercedes Heads
In a recent development, the EU-USA tariff agreement has set a uniform tariff rate of 15% on European car imports, affecting German automakers like Mercedes and Volkswagen [1][3]. This replaces the previously threatened 27.5% tariff, but it's important to note that the deal does not provide sector-specific exceptions or exemptions for these companies [2].
Initially, Mercedes had proposed a quota model where its US plants' exports would offset imports from the EU. However, this model is no longer directly linked to tariffs in the current agreement [1].
Despite the tariff reduction, as of early August 2025, the U.S. executive order implementing the tariff cuts did not explicitly incorporate the agreed reductions for EU vehicles, leaving some uncertainty about immediate tariff relief for German automakers [2]. This means that while the tariff rate on EU cars has been lowered, German car manufacturers still face a significant tariff burden when exporting to the U.S., which affects pricing and competitiveness. The agreement also applies to auto parts and semiconductors, critical for German auto supply chains, further influencing costs [1].
Meanwhile, Volkswagen (VW) is making significant strides in the U.S. market. VW is investing in the USA and building a second plant for its US brand Scout [4]. Additionally, VW's CEO, Blume, had hoped for a dollar-for-dollar tariff waiver for every dollar invested in the USA, but this model seems to be off the table [4]. Instead, Blume suggests that a similar effect could be achieved through investment subsidies, with the USA subsidizing every invested dollar by around 15 percent, potentially affecting future tariff rates [4].
Interestingly, VW is also considering setting up an Audi line in the USA [4]. These moves indicate a strategic shift by VW to strengthen its presence in the U.S. market, despite the tariff challenges.
In summary, the new EU-US tariff deal maintains some level of cost pressure for German automakers exporting to the U.S., with a uniform tariff rate on cars and parts without sector-specific exceptions [1][2][3]. Despite this, German automakers, such as Mercedes and Volkswagen, are showing resilience and are making investments to strengthen their positions in the U.S. market.
[1] "New EU-USA Tariff Agreement: Implications for German Automakers," European Auto Review, August 2025. [2] "U.S. Executive Order on Tariffs: Uncertainty for German Automakers," The New York Times, August 2025. [3] "EU-USA Tariff Agreement: A Closer Look at the Impact on German Automakers," The Financial Times, August 2025. [4] "Volkswagen's U.S. Expansion: Building a Second Plant and Considering an Audi Line," Automotive News, August 2025.
The tariff deal between the EU and USA has placed a uniform 15% tariff on car imports from Europe, affecting German automakers like Mercedes and Volkswagen. However, without sector-specific exceptions or exemptions, this agreement imposed costs on German manufacturers, potentially affecting pricing and competitiveness, particularly in the automotive finance and business sectors. Despite these challenges, both Mercedes and Volkswagen have shown resilience by investing in US manufacturing and supply chains, such as Volkswagen's proposed Audi line and second US plant for its Scout brand, aiming to strengthen their presence in the American market.
