The automotive sector in the EU on Monday saw the trade agreement reached with the United States as a reduction in tension — yet one that continues to create obstacles.
German automobile companies, in particular, faced significant export challenges, as reflected in their stock prices.
Porsche, Volkswagen, BMW, and Mercedes-Benz stocks all declined by over three percent during Monday's trading.
The agreement reduces "the intense uncertainty about transatlantic trade relations in recent months," stated Europe's primary automotive group, the European Automobile Manufacturers' Association (ACEA), in a statement expressing approval of the deal "in principle."
However, it was mentioned that the 15 percent U.S. tariffs on EU products, including vehicles, "will continue to negatively affect not only industries in the EU but also in the U.S."
German Chancellor Friedrich Merz stated that his nation's economy, which is the largest in Europe, would suffer "significant harm" due to the US tariffs included in the agreement.
But, he remarked, "we couldn't anticipate achieving anything further."
The United States serves as a crucial market for European car manufacturers, who shipped almost 750,000 vehicles there last year, accounting for roughly a quarter of the industry's total exports.
Although the 15 percent rate is lower than the 27.5 percent tariff that US President Donald Trump introduced in April, it is significantly higher than the 2.5 percent tax that European car makers encountered prior to Trump's re-election.
A German expert, Stefan Bratzel, stated that it was likely US consumers would bear two-thirds of the price increase resulting from the tariff, while car exporters would likely absorb the remaining third.
For those businesses, "we may need to check if it's feasible to reduce expenses elsewhere," he mentioned.
The 15 percent rate mirrored an agreement the United States had with Japan, another significant automobile exporting nation.
Will cost industry 'billions'
German automobile manufacturers consider the United States to account for approximately 13 percent of their exports.
In the short term, a 15 percent tax would cost them "billions annually," stated Hildegard Mueller, head of the national automobile manufacturers' association VDA.
The circumstances have compelled all automobile manufacturers to reduce their 2025 profit predictions and seek methods to ease the strain.
In June, BMW's CEO Oliver Zipse proposed that Europe might eliminate its own tariffs on vehicles imported from the United States.
This could help his company, which exported 153,000 vehicles from the Americas last year and imported 92,000 cars assembled in the United States into Europe.
In the same way, Mercedes is seeking assistance from the national or European Union level.
A company spokesperson told AFP, 'The agreement between the EU and the US is a significant initial step that must be followed by additional actions.'
"Politicians must continue to work towards eliminating barriers that hinder free trade. We rely on the EU and US to maintain their positive discussions in the future," she stated.
Volkswagen is also experiencing tariff challenges for vehicles produced in Mexico intended for the US market, with its first-quarter performance being reduced by approximately 1.3 billion euros ($1.5 billion) compared to the previous year.
Their Porsche and Audi vehicles are also affected since they do not have manufacturing plants in the United States.
On Monday, Audi lowered its revenue and profit forecasts for this year, although it mentioned that it anticipates an increase in these figures next year.
Volkswagen's CEO, Oliver Blume, has proposed establishing a separate agreement with the United States that would consider the investments his company might make there.
The Swedish automobile manufacturer Volvo Cars, which is owned by China's Geely Holding, has reported significant losses in the second quarter due to tariffs.
The European automotive industry is currently seeking to persuade the European Commission to postpone the schedule for transitioning the European vehicle market entirely to electric, and to offer some form of economic support for the sector.
Without assistance, European automobile manufacturing plants, already dealing with difficult circumstances, "will need to cut down on production," stated Ferdinand Dudenhoeffer, head of the Center for Automotive Research.
He stated that this could impact as many as 70,000 positions in Germany alone.