The tariffs that are issued by the United States are set to cost the Automakers of Germany about $7 billion per year. This is supposed to be worse than what simple car factories are facing. The Trump government has 90 days to decide if such tariff plans will be issued on the imports of vehicles. This threat seemed to have gravely disturbed the auto industry of Germany.
The tariff is set to cost Volkswagen $2.8 billion per year in profit. The profits of BMW will be reduced by $1.9 billion, while Daimler is set to face a $2.3 billion reduction. These estimates have been made by the CEO of Volkswagen, Herbert Dies. He mentioned that the figures he mentioned were pretty close to the actual figures. Others like BMW, Daimler and Benz have refused to comment on this. Since automobile export tends to make up about 30% of the total exports for Germany, this may have a massive impact on the economic condition.
The Economic Research unit of Germany (IFO) has estimated that if the 25% tariff plan were to be imposed, within a decade, the exports to America would fall from $38 billion to $17 billion. They also mentioned that this would disturb the GDP of the country by 0.16%.
Such decisions being made in the United States is likely to affect other countries globally. More than half of all the automobiles sold in US are manufactured outside the country, mostly Japan, Mexico and Canada. As a result of this the GDPs for all the three countries are expected to be hurt. These tariff plans are also expected to start a massive conflict between the US and Europe, mainly for the importance the Automobile sector holds in Europe. If this continues, the European Union holds a much harder capacity to hit back America with, something that China could never have achieved.