Germany’s economy minister, Robert Habeck, issued a sharp warning Wednesday after Washington’s decision to slap hefty new tariffs on foreign-made vehicles, declaring, “We won’t cave to the US.” He called on the European Union to respond firmly to the move.
Starting April 2, American importers will face a 25% tariff on vehicles made outside the US—a measure US President Donald Trump hailed as “Liberation Day.” The decision threatens to rattle European automakers, particularly German giants like Porsche and BMW, who count on American buyers for a significant chunk of their sales.
The UK, meanwhile, scrambled to protect its own interests. Chancellor Rachel Reeves said London was deep in talks with Washington, aiming to avoid a full-blown trade dispute. “We don’t want to escalate,” she told Times Radio, stressing how intertwined the British and American economies remain.
The tariffs land hardest on Germany’s auto sector, which is already under pressure. Porsche sells one in three of its vehicles in the US, while BMW exports one in six cars to American buyers. German stock markets took a hit following the announcement, with market analysts predicting further pain for European manufacturers.
“The tariff hammer has fallen,” said Jochen Stanzl, chief market analyst at CMC Markets. He warned the duties would likely dent profits further and could force some manufacturers out of the US market altogether if they can’t strike favorable terms. While some German brands, like Volkswagen and Mercedes-Benz, build vehicles in the US, the majority of their American sales still rely on imports.
European Commission President Ursula von der Leyen voiced regret over the tariffs but stopped short of threatening immediate retaliation. Instead, she signaled the EU would push for negotiated solutions while defending its economic interests.
The UK, facing similar risks, noted that motor vehicles make up its top export to the US—worth over £6 billion annually, including brands like Land Rover and Jaguar.
But the auto sector may not be the only target. Trump hinted at further tariffs, this time on pharmaceuticals, claiming the US had become too reliant on foreign production. That comment sent alarm bells ringing in Dublin, where Ireland’s finance minister warned tens of thousands of jobs could be at stake if Trump followed through on threats to hit the country’s tax policies.
As the April deadline looms, Europe and the UK now face an uphill battle to protect key industries and prevent a transatlantic trade war.
