German carmakers warn Trump’s tariffs would hurt U.S. consumers, global auto industry

Proposed U.S. tariffs on car imports could increase prices for American consumers and destabilise the global auto market, Germany’s influential auto industry group warned on Tuesday.

Hildegard Mueller, president of the VDA auto association, cautioned that tariffs as high as 25% would push up U.S. inflation, directly contradicting President Donald Trump’s campaign promise to keep prices low. “We hope further discussions can prevent a decision that harms both economies,” Mueller said during the VDA’s annual press briefing.

German automakers, including Volkswagen, Mercedes-Benz, and BMW, emphasised their contributions to the U.S. economy. Volkswagen alone has invested over $10 billion in the United States, notably in its Chattanooga plant and a joint venture with Rivian. “Tariffs would harm American consumers and disrupt a functioning global production network,” a Volkswagen spokesperson noted.

The ripple effects of potential tariffs are already being felt in global markets. Shares in Asian automakers like Honda and Hyundai, both reliant on Mexican plants, dropped sharply. European companies such as Volkswagen and Stellantis also saw declines, with Stellantis shares down 1.3%.

Central to the debate is Mexico’s role as a key player in the North American supply chain. Global automakers manufacture vehicles and source components in Mexico for U.S. consumption. Mueller underscored that many German car plants operate in Republican-leaning states, providing thousands of jobs. “This should be considered during tariff discussions,” she stated.

While President Trump has yet to enforce these tariffs, his administration has indicated they remain a viable option, with decisions potentially rolling out as early as February 1. Automakers are in discussions with U.S. officials to highlight the economic risks of such measures.

John Elkann, Chairman of Stellantis, spent four days meeting with Trump and his team to negotiate terms and avoid detrimental policies. “Automakers are committed to supporting U.S. manufacturing but urge balanced trade decisions,” Elkann said through a company source.

As talks continue, automakers remain concerned about the long-term effects on U.S. consumers and the broader industry. Mueller summed it up: “We offer significant benefits to the U.S. economy. Tariffs could undo years of progress, hurting jobs, growth, and affordability for American families.”

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