Germany's car exports to US plunge amid tariff hikes

BERLIN: Germany’s car exports to the United States fell sharply in April and May after new tariffs from Washington came into effect, despite only a modest overall decline of 1.9% in the first five months of 2025, official data showed on Friday.

According to the Federal Statistical Office (Destatis), vehicle shipments to the United States rose by 14.7% year-on-year in the first quarter. However, in April and May, exports plunged by 23.5% after Washington imposed a 25% tariff on vehicle imports from the European Union (EU).

The first-quarter surge was largely driven by front-loaded orders, as American customers rushed to buy ahead of the planned tariff rise initiated by US President Donald Trump. Once the duties came into effect on April 3, German car exports were hit harder than industry analysts had anticipated.

Germany’s automotive industry association, VDA, had previously warned that the additional auto tariffs would significantly impact EU car exports to the United States. It also highlighted the potential damage to global supply chains and increased costs for American consumers.

‘The additional US tariffs send a disastrous signal for free, rules-based trade,’ the association said, adding that Trump’s tariff policy had already faced criticism from within the US industry and would ultimately hamper economic growth and prosperity on both sides of the Atlantic.

The United States has long been Germany’s largest trading partner in the automotive sector. In 2024, Germany exported vehicles worth €36.8 billion ($42.8 billion) to the United States, while importing €7.9 billion, according to VDA data.

Eurostat figures released this week confirmed that the United States remains the top destination for EU automotive products, accounting for 20% of the EU’s total domestic value added in the sector. Germany is by far the bloc’s largest vehicle exporter to the United States.

Germany’s three largest carmakers – Volkswagen, Mercedes-Benz and BMW – were responsible for around 73% of EU car exports to the United States last year, according to German media reports. All three have reportedly come under growing pressure following the tariff hikes.

Porsche, the luxury sports-car maker owned by the Volkswagen Group, is considering further cost-cutting measures in response to weakening sales and rising expenses, the German Press Agency (dpa) reported on Friday.

In a letter to employees, Porsche’s chief executive, Oliver Blume, admitted that the company’s recent performance had fallen short of expectations and warned of further structural adjustments. Last week, the company reported 6% drop in global sales for the first half of the year.

Beyond sluggish demand for electric vehicles and a softening luxury market, Porsche is also facing pressure on profit margins in the United States due to the new import tariffs. The company estimates it has incurred approximately €300 million in extra costs under price-protection measures to offset the higher US duties in April and May.

‘All of this is hitting us hard – harder than many other car manufacturers,’ Blume said.

Meanwhile, Destatis import data showed that US-made vehicles are also losing ground in the German market. In the first five months of 2025, imports from the United States dropped by more than 30% year-on-year, falling to fifth place behind China.

That decline indicates that US automakers, including German brands producing in America, are also facing significant losses. According to the VDA, the United States exported 233,600 vehicles worth €10.3 billion to the EU in 2024, with around 60% of them destined for Germany. Half of the vehicles produced by German companies in the United States are exported to markets worldwide.  

(€1 = $1.16)

By RSS/Xinhua