Germany could suffer production losses of up to 30 billion euros ($34.7 billion, or about 51.9 trillion won) if U.S. President Donald Trump raises tariffs on European Union-made automobiles back to 25%, according to a new analysis.
Moritz Schularick, president of Germany's Kiel Institute for the World Economy (IfW), estimated in an interview with Reuters on Tuesday local time that tariff hikes would cause short-term losses of 15 billion euros (about 25.9 trillion won) for Germany. He argued that production losses could grow to as much as 30 billion euros over the longer term. The IfW, however, did not disclose specific calculation methods.
Volkswagen Group, which accounts for about 40% of German auto production, has said the current 15% tariff alone generates annual costs of 4 billion euros (about 6.9 trillion won). Mercedes-Benz and BMW, by contrast, face relatively smaller tariff burdens thanks to their higher local production in the United States.
Trump imposed 25% item tariffs on EU-made automobiles in April last year, then lowered them to 15% from August under an agreement with the EU. But the previous day, he said the EU was not complying with the trade agreement and announced he would raise the tariffs back to 25% starting next week.
In Germany, observers suggest that Trump pulled out the tariff card as a warning over his recent dispute with Chancellor Friedrich Merz regarding the Middle East war. Jens Südekum, an adviser to the finance minister, noted that "it is well known that Trump quickly suspends or withdraws grandiose tariff threats," and pointed out that the legal basis for the tariff increase is unclear.
