European cars fear Trump's tariffs, EU must come to an agreement

ACEA: 'The only alternative is an escalating tariff war in which the EU and the automotive industry have a lot to lose'

By: Eleonora Lilli

Jan 18, 2025 at 4:05am ET

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On 20 January Donald Trump will be sworn in as the 47th President of the United States. In his election promises he had talked a lot about possible 25% duties on cars and parts produced in Mexico and Canada, as well as new taxes on China.

Now that there are only a few days to go before the start of his term of office, European car manufacturers are calling on Brussels to come to an agreement with the new President so that the duties remain only electoral promises.

"European car companies support the creation of prosperity, jobs and growth in the United States" and are "an integral part of the US economy", said ACEA President Ola Källenius, who is also CEO of the Mercedes-Benz group, speaking at the Brussels Motor Show recently.

European cars depends heavily on the US

As Automotive News Europe recalls, the US is the biggest market for European car exports (we are talking about $40 billion a year). Conversely, imports are worth around USD 9 billion.

BMW, Mercedes, Volkswagen and Volvo all have major assembly plants in the US. Mercedes alone, says Källenius, has created 80,000 direct and indirect jobs and has invested tens of billions of dollars in the US over the last century.

Without agreement it will be 'war'

The Trump administration has hinted that it is willing to engage in talks on tariffs, and Källenius called on the EU to think hard about a deal and find a win-win solution for European manufacturers as soon as possible.

"The only alternative is an escalating tariff war in which the EU and the car industry have a lot to lose. I don't think this is an attractive scenario," said Källenius, who recently wrote an important letter to Europe's political leaders on the change to the European Green Deal.

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