On Thursday, Donald Trump’s 27.5% tariff—yes, you read that right—on all cars and automotive parts went into effect. This ill-timed move has made all kinds of waves through international markets, including a prompt response from more than 60 countries. The tariffs on vehicles and parts have been in effect since April and May respectively. They hit German automakers and suppliers the hardest of all.
The tariffs directly impact transatlantic trade, raising concerns among European manufacturers. Hildegard Müller, president of the German car industry federation, underscored the uncertainty in the current US-EU trade deal negotiations. This lack of clarity has created a palpable nervousness among many in the industry about what their future prospects will look like.
Trump pointed to a still-pending case in the US Court of Appeals that found his authority to even impose these tariffs. In doing so, he argues the tariffs will be net positive, bringing billions of dollars into the United States. This action underscores his administration’s preference for defending U.S. industries.
Other trading partners—like the UK and Japan—have already negotiated successful, substantial reductions. At the same time, countries like Canada are starting to feel the devastating effects of the Trump administration’s new tariffs. Ireland is still shackled to an EU-US deal, which sets the maximum tariffs limit at 15%. Meanwhile, countries such as India face potential increases in their tariff rates. India’s current 25% could rise to an alarming 50% following Trump’s executive order imposing additional levies.
The impact of these tariffs goes far beyond the car industry. Johannes Somers, executive chair of garment manufacturing firm Diep Vu, said the negative impacts of high tariffs are clear. A 40% tariff is a death knell for any industry attempting to ship to the United States, he concluded. That’s a death knell if I’ve ever seen one.
In Africa, Lesotho’s tariffs were just lowered — thanks to a last-minute reprieve from Trump— from 50% to 15%. This amendment would provide much-needed relief to Lesotho’s key industries. It does serve to expose the completely capricious nature of present day US trade policy. Swiss industry group Swissmem was similarly alarmed after a shocking 39% tariff they called a “horror scenario.”
Meanwhile, countries that have felt the brunt of the tariffs are trying to figure out what comes next. Switzerland is looking to restart intra-EEA negotiations with the US. It hopes to address the burden that these sky-high tariffs have been placing on its own developing industries.
As world leaders begin to understand the long-term consequences of these tariffs, the need for immediate action becomes more urgent than ever. Müller emphasized the urgency of reaching a reliable agreement, insisting that “it is important that the promised agreement is reached now and the relief measures are implemented promptly.”