For Germany, the European Union’s economic powerhouse, the stakes in the new US-EU trade deal could not be higher. As the bloc’s largest exporter to the United States, with €161 billion in goods shipped last year, the country’s world-renowned automotive industry is anxiously watching Brussels, waiting for the legislative action that will unlock US tariff relief.
The current 27.5% US tariff on European cars has been a major threat to German manufacturers like Volkswagen, BMW, and Mercedes-Benz. The new framework promises to lower this to 15%, but the catch is that the reduction only happens after the EU introduces a bill to cut its own tariffs on US exports. This condition effectively makes the German auto industry’s fortunes dependent on the speed of EU bureaucracy.
The pressure to act swiftly is immense. Every month the 27.5% tariff remains in place costs the industry dearly, impacting profits, investment decisions, and employment. US officials have indicated they are ready to act immediately once the EU tables its proposal, putting the timeline for relief entirely in European hands.
This dynamic highlights the internal and external pressures facing the EU. On one hand, there is an urgent need to support its most critical export sector. On the other, the deal has been criticized by other member states like France and Spain and has failed to satisfy industries beyond automotive, creating a complex political landscape for lawmakers in Brussels to navigate.