A new trade agreement between Donald Trump and the European Union will shake the auto industry again. During a meeting in Scotland with President of the European Commission, Ursula von der Leyen, Trump agreed to reduce the tariffs for most EU goods – including new cars – from 27.5% to 15%. This is still six times higher than the 2.5% tariff that existed before Trump’s trade movement, but it is a remarkable decline compared to the steep duties at the beginning of this year.
Relief, but no return to the normal value
This is a mixed bag for BMW. The company was hit hard with Mercedes -Benz, Volkswagen and others by the 27.5% tariff introduced in April. These higher import costs disrupted the offer chains, the bloated stickers and compulsion to attend financial forecasts again. Accordingly Bloomberg IntelligenceBMW and Mercedes thanks to the New Deal around 4 billion euros (4.7 billion US dollars). A large part of it comes from what is no longer taxed: around 185,000 vehicles that were exported annually from their US factories – like the Spartanburg plant from BMW in South Carolina – the EU is now probably freed from tariffs.
But not everything is covered. Vehicles that drive from Europe to the USA are still exposed to this new 15% rate. So while the worst-case scenario of a 30% tariff (which Trump had to impose) was avoided, the New Deal does not restore the conditions before 2024.
Why is it important for BMW
The United States is one of BMW’s most profitable markets. The company exports more vehicles from its US plant than imports into the country. It is a rare example for a German car manufacturer with an important US manufacturing footprint. Nevertheless, the new tariff structure means additional costs and more pressure. BMW must decide whether the difference should be absorbed or passed on to customers, of whom nobody is ideal in a competitive market. The EV transition is already eating into the edges, and slowing down the demand for electrical models has not helped.
Germany’s reaction
German Chancellor Friedrich Merz welcomed the business and described him as a necessary step to avoid further economic damage. The Germany’s economy is heavily based on automobile exports, and its large car manufacturers had prepared for another wave of financial burden if the 30% tariff had been passed through.
Managers from BMW and other German car manufacturers have made repeated trips to Washington in recent months to defend themselves against the escalating trade war. Although they didn’t get everything they wanted, the exception for vehicles built in the USA is a victory. BMW and his colleagues are dealing with more than just tariffs. The competition from Chinese brands is growing and the regulatory requirements of the EU continue to rise. At the same time, the car manufacturers spend billions for EV development and try to manage slower acceptance in most markets.
When do the new tariffs start?
The rollout of the new tariff rules from August 1 gives BMW a little more clarity, but not much comfort. While the deal prevents further escalation, it blocks a higher cost base for shops in the USA – a market where German brands rely on strong sales and solid margins.
In short, the pressure has not disappeared. It is only postponed.
August 1, 2025.
It drops from 27.5% in April 2025, but is still higher than with the 2.5% due before 2024.
No. A 50% tariff for steel and aluminum remains.
Lower import costs as the top of the April, the continued pressure on EU-built imports and a certain relief through US vehicles that were dismantled into the EU.
BMW still has to communicate about it. We believe that it depends on the model mix and costs. Brands can incorporate some costs or adapt the pricing.
