Customs dispute between EU and USA: car imports in great danger!

Customs dispute between EU and USA: car imports in great danger!

Negotiations between the EU and the USA over car import tariffs are gaining momentum. Currently, the import tax on cars from Europe to the United States is 27.5 percent. These provisions were changed in April 2024 at a time when the US increased its tariff to 25 percent from the previous 2.5 percent. This drastic measure has placed a heavy burden on the German auto industry, particularly manufacturers such as BMW and Mercedes-Benz. Reuters reports that the EU is working to reduce tariffs and has put forward various proposals, including import quotas, credits for car exports and investments in the US.

The negotiations are part of an effort to defuse the conflict between the two economic giants and reach an agreement that could potentially avert President Trump's threatened hikes. Trump could increase tariffs on European vehicles from 10 to 20 percent, which would put additional pressure on affected manufacturers. An EU diplomat has stressed that cars represent a “red line” for negotiations.

Trade agreements and investments

One goal of the talks is to significantly reduce tariffs on both sides. In this context, the EU could propose credits for European car manufacturers to make exports to the USA more attractive. In 2024, Europe exported almost 758,000 cars worth 38.9 billion euros to the US, with German manufacturers accounting for over half of the volume, around 448,000 cars.

Looking ahead, there is already an initiative from Volkswagen that produces in the US but does not export on a large scale. VW boss Blume has already discussed investment plans with the US government. Audi is also considering building a factory in the USA, which could strengthen the market position of the German manufacturer. A possible relief could be based on the model of the agreement between Great Britain and the USA, which allowed Great Britain to reduce tariffs to 10 percent on 100,000 cars per year. Unfortunately, the Trump administration is skeptical about a similar solution for the EU.

Economic impact

Tariffs and trade barriers are generally considered negative for economic prosperity, but they are widespread in global trade. Loud The Windscreen These tariffs could significantly increase the prices of European cars in the US, which would demonstrably reduce sales volumes. An example calculation shows that a vehicle price of 25,000 euros at 2.5 percent duty would rise to 29,675 euros at 25 percent duty. This could not only influence competition in the American market, but also noticeably reduce importers' profits.

The trade volume between the US and the EU is significant. While around 692,334 cars were imported from the EU in 2022, the EU only exported 116,207 cars back to the USA. This shows that European exports to the US account for a much larger market share. In fact, 13.4 percent of European car exports go to the USA, while conversely less than 5 percent are exported.

Given these factors, the outcome of the upcoming negotiations will be crucial not only for the auto industry, but also for the business landscape in both regions. The proposed solutions, including possible simplification of safety standards and non-tariff trade barriers, could play a crucial role in restabilizing car exports and imports between the US and the EU.