Consultation conducted on the draft directive addressing the safeguarding of workers from ionizing radiation-related risks.
The recent EU-US trade agreement, signed in July 2025, has brought some relief to the automotive sector, particularly for German car manufacturers like Volkswagen, BMW, and Mercedes-Benz. The agreement has imposed a 15% U.S. import tariff on EU-made vehicles, replacing the previous 27.5% automotive tariff.
While the reduction in tariffs is a step in the right direction, it still presents a significant cost burden for German car manufacturers. The German Association of the Automotive Industry (VDA) estimates billions of euros in additional costs yearly to the German automotive sector due to the tariff. This could potentially erode profits by billions annually.
The tariff environment may prompt relocation of production facilities from Germany/Europe to North America to avoid tariffs, although this is a costly and risky adjustment for manufacturers. The agreement also complicates supply chain arrangements within North America, challenging manufacturers with integrated cross-border production.
The tariff, while reduced, continues to hinder competitiveness and profit margins. European suppliers with production across the North American continent face new 25% tariffs on auto parts that lack sufficient North American content, complicating transatlantic and North American supply chains.
Industry response to the agreement has been mixed. The tariff reduction has made business somewhat more predictable for the automotive sector. However, concerns over job cuts and investment delays due to profit margin pressure persist. German car makers and industry groups are pushing for additional measures, including EU industrial subsidies and trade diversification, to offset the trade barriers introduced by the deal.
The trade agreement is currently a political agreement and not yet legally binding, indicating that further negotiations may continue to refine or improve terms.
In summary, while the tariff cut from 27.5% to 15% reduces some costs for German automakers exporting to the U.S., the 15% tariff still represents a significant financial burden, affecting margins and investment decisions amid an industry transition to electric vehicles. The agreement also complicates supply chain arrangements within North America, challenging manufacturers with integrated cross-border production. German car makers and industry groups are pushing for additional measures to offset the trade barriers introduced by the deal.
| Aspect | Details | |--------------------------------|-----------------------------------------------| | Tariff on EU vehicle imports | 15% (reduced from 27.5%) | | Impact on German automakers | Billions in additional costs, profit erosion | | Industry response | Concerns over job cuts, investment delays | | Supply chain effect | Complexity due to USMCA auto parts tariffs | | Production shift possibility | Potential relocation to North America | | Deal status | Political agreement, further talks pending |
- The 15% tariff on EU vehicle imports still imposes a substantial financial burden on German automakers, potentially leading to billions in additional costs and profit erosion for the German automotive sector.
- In an effort to offset the trade barriers introduced by the EU-US trade agreement, German car makers and industry groups are advocating for EU industrial subsidies and trade diversification strategies.
