Germany’s VDA is calling on the U.S. to halt automotive trade tariffs, citing rising costs, disrupted supply chains, and intensifying trade tensions. The 25% tariff disproportionately hurts German exports. Auto producers such as Mercedes-Benz, BMW, and Volkswagen are under financial pressure due to the Section 232 imposition. The VDA also calls for instant negotiations to protect the future of transatlantic trade and avoid further economic damage.
Tariffs Create Trouble For EU Auto Giants
President Trump reinstated Section 232 tariffs in March 2025, citing national security concerns. European automakers have seen a rise in costs, especially those that export from Germany. This is due to the reciprocal 10% EU tariff and the new 25% duty on imported vehicles and parts.
The financial results of significant German automakers have already been impacted by these trade tariffs. In addition, Volkswagen reported a $1.5 billion loss during the first half of 2025. Although Mercedes-Benz and BMW both have manufacturing plants in the US, they continue to use imported parts, which are now taxed more heavily. Additionally, suppliers like Continental and Bosch are reporting cost pressures.
The VDA warns that higher import duties could cause the vehicle costs in the US to explode for luxury models. Furthermore, since 138,000 American jobs are associated with German auto companies, the effects are not limited to Germany. Instability in the supply chain and rising consumer prices may also affect forex markets, making investors more wary.
VDA Demands Action To Stabilize Auto Trade
The president of the VDA, Hildegard Müller, was appalled by the tariffs as being unfair and harmful to both economies. She asked Washington to remove the extra 10% sectoral duties and halt the automotive trade tariffs. As a result, manufacturers and consumers will experience less financial strain.
The VDA suggests a bilateral deal between the US and the EU to reduce trade tensions. The proposed agreement would also cover certification requirements, rules, and tariffs. This could help restore competitiveness in the face of global economic uncertainty, protect investments, and stabilize trade.
Will Automotive Trade Tariffs Shake Forex Further?
The VDA’s demands reflect urgent concerns within Germany’s key industrial sector. Over four years, extended tariffs could cost the German economy €200 billion. Thus, it is putting pressure on the EU’s overall trade balance as well as German exports. This could lead to currency volatility, and if export flows fall, the euro would weaken.
Germany sent almost 450,000 cars to the United States in 2024. However, the US shipping slightly more than 230,000 cars to the EU exposed the disparity. If a deal cannot be reached, EU producers may alter their output.
Alternatively, reroute sales to avoid U.S. duties and further tax other markets. The tariffs have already led to stock prices of Volkswagen, Mercedes, and BMW falling. Additionally, ongoing uncertainty can further heighten investor fear globally. Therefore, these mounting trade tensions make safe-haven currencies such as the dollar increasingly attractive to forex traders.
Are Automotive Trade Tariffs Risking Global Stability?
The VDA’s proposal to lift auto trade restrictions comes at a crucial time for the global auto industry and trade. Furthermore, the German auto industry is already dealing with declining demand and high costs; further difficulties could make losses worse.
In addition, the delay in retaliation by the EU provides room for diplomatic considerations. Still, not negotiating is likely to have long-term adverse consequences on German exports, market confidence, and currency stability. The coming months will see a major shaping of economic ties across the Atlantic.
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