German car stocks slide as US threatens EU with 30% tariff
By Abigail Townsend
Date: Monday 14 Jul 2025
(Sharecast News) - Shares in German car makers came under pressure on Monday, as crucial trade negotiations between the European Union and US looked to stall over the weekend.
The sell-off was largely in response to a threat by Donald Trump, made over the weekend, to impose a 30% tariff on all EU imports - seemingly including cars and car parts - from 1 August.
US imports of cars and car parts are currently subject to a 27.5% duty.
In an terse letter issued to EU president Ursula von der Leyen, Trump wrote: "We have had years to discuss our Trading Relationship with the European Union and we have concluded we must move away from these long-term, large, and persistent Trade Deficits, engendered by your Tariff and Non-Tariff, Policies, and Trade Barriers.
"Our relationship has been, unfortunately, far from Reciprocal."
He also threatened to hike rates beyond 30% should the EU retaliate with its own duties.
On Sunday, the EU agreed to delay introducing its own planned tariffs. Hitting around €21bn of US goods, the taxes were due to come into effect this week, but that has now been pushed back until early August.
Italy's prime minister, Giorgia Meloni, also said on Sunday that she believed a "fair agreement" would still be reached.
On Monday, however, EU trade commissioner Maros Sefcovic was blunter. Speaking ahead of a meeting of European trade ministers, he told journalists: "Let's be honest, the idea of 30% tariff rate is effectively prohibitive to mutual trade."
He added that the bloc had noted Trump's letter with "regret and disappointment" and warned that duties at that level would make it "almost impossible to continue the trading as we are used to".
Sefcovic insisted talks with Washington would continue, but it was not enough to prevent the sell-off across Germany's car sector, one of the bloc's most important industries.
The sector is also heavily reliant on just-in-time global supply chains and worldwide sales markets.
As at 1100 BST, shares in Mercedes-Benz Group, Volkswagen and BMW were all down 2%.
The EU was hit with a 20% tariff on 2 April, Trump's so-called Liberation Day. That was later paused, however, with the bloc paying the baseline 10% rate - which Trump applied to all countries worldwide - while talks between the two sides got underway.
Stephen Innes, managing partner at SPI Asset Management, said: "Should the full 30% hike go through, it could shave as much as 0.4 percentage points off Eurozone GDP, a gut punch for an already anaemic economy tip-toeing along the recessionary edge.
"There are paths forward.
"But let's be clear: full-scale retaliation remains the tail risk. Europe has weapons too - digital services taxes, pharmaceutical choke points, tech regulations - but unleashing them risks a trade war that no one's balance sheet can afford."
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