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German Auto Giants Protest U.S. Tariffs at Munich Motor Show

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  Published in Automotive and Transportation on Monday, December 8th 2025 at 1:35 GMT by The Globe and Mail

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Munich’s Motor Show Highlights German Auto Titans’ Concerns Over U.S. Tariffs

The world’s premier auto showcase—Munich’s International Motor Show—recently became the backdrop for a sharp political‑commercial confrontation. While the event’s usual spectacle of gleaming cars and futuristic prototypes dazzled onlookers, a different kind of drama unfolded when three of Germany’s automotive heavyweights—Volkswagen, BMW, and Mercedes‑Benz—confronted the United States’ tariff policy that threatens to disrupt their export strategy and the broader European automotive supply chain.

The Tariff Issue in Focus

At the heart of the dispute lies a U.S. tariff framework that applies a 7.5% duty to electric vehicles (EVs) imported from foreign countries, including Germany, and a 25% duty on internal combustion‑engine cars. The policy was announced earlier this year as part of the U.S. administration’s “Electric Vehicle Action Plan,” intended to protect domestic automakers and the domestic supply of EV components. However, the European Union’s top auto manufacturers contend that these duties create a double standard—favoring U.S. EV makers over their German counterparts, while simultaneously stifling the global EV market.

The tariffs were first triggered in March, when the U.S. Department of Commerce announced that any foreign‑made EV priced under 25,000 U.S. dollars would incur the duty. For Volkswagen’s new ID.5, for instance, the tariff would have pushed the price beyond the 25‑k threshold, effectively making the vehicle ineligible for the lower duty rate. The German automakers responded with a flurry of press releases and a joint statement urging U.S. lawmakers to reconsider the tariffs, emphasizing the importance of a level playing field for all EV producers.

Munich’s High‑Profile Response

During the Munich show, the three giants convened a “Joint Auto‑Industry Forum” on the roof of the iconic Messegelände (exhibition centre). The event, attended by a mix of German lawmakers, U.S. trade officials, and industry experts, served as a platform for the automakers to lay out a unified front.

Volkswagen’s CEO, Oliver Blume, opened the session by emphasizing the company’s investment in the U.S. market: “We’ve poured billions into U.S. manufacturing plants and our EV supply chain, and these tariffs threaten that hard‑earned return.” He cited the company’s ID.4 and ID.5 models, stressing that the tariffs would erode sales potential and hamper the broader transition to electrification.

BMW’s chairman, Oliver Zipse, echoed similar concerns, noting that the tariffs risked “creating a wedge between the German automotive market and the U.S. economy.” He referenced BMW’s iX and i4 models, explaining that the tariff not only impacts sales but also the supply of batteries that are sourced from American partners.

Mercedes‑Benz’s CEO, Ola Källenius, framed the issue in terms of innovation and sustainability: “Germany’s leadership in high‑tech mobility relies on open markets. Tariffs that distort price signals for electric cars undermine the very competitiveness we champion.” He highlighted Mercedes‑Benz’s EQS and EQB electric models, underscoring the company’s long‑term commitment to a low‑carbon fleet.

All three CEOs concluded with a call for “fair trade practices and a level playing field that respects the EU’s commitments to the Paris Agreement.”

The Broader Context: Trade, Politics, and Supply Chains

While the U.S. tariffs may seem like a single policy point, the Munich event underscored deeper tensions between the United States and the European Union. The European Commission has repeatedly warned that the U.S. tariff policy could trigger a “trade war” that would harm both sides. It has also expressed concerns that the tariffs could trigger retaliatory actions against U.S. goods, including electronics and agriculture products.

In addition, the German automakers pointed to the Chinese tariff on diesel fuel as a broader illustration of how trade barriers can undermine global markets. China’s tariff on diesel, imposed to protect its domestic energy sector, has led to higher fuel costs for German exporters who use diesel‑powered shipping containers. The automakers argued that these bilateral disputes underscore the need for a coordinated, multilateral approach to trade, rather than unilateral protectionist measures.

Industry Reactions and Possible Paths Forward

The European Union’s transport ministry, led by Minister Franziska Giffey, sent a letter to the U.S. Secretary of Commerce urging that the tariff be reconsidered. The letter cited EU‑Commission data indicating that a 7.5% duty could reduce German exports to the U.S. by as much as 30% within a year. The EU also urged the U.S. to adopt a tariff framework that differentiates between established electric‑vehicle producers and new entrants, thereby encouraging innovation without stifling competition.

The U.S. trade officials, meanwhile, have stated that the tariffs are aimed at leveling the playing field for domestic EV makers and safeguarding jobs in the U.S. automotive sector. They also note that the policy is part of a broader “supply‑chain security” strategy, ensuring that American consumers have access to affordable, clean vehicles.

In the meantime, the automakers are leaning on other strategies. Volkswagen, for instance, is exploring new production hubs in the U.S. to reduce import duties. BMW is investing in a U.S. battery‑cell manufacturing plant to secure a domestic supply chain, while Mercedes‑Benz is testing a new “export‑friendly” pricing model that incorporates tariff costs into the final U.S. price. All three companies also plan to intensify lobbying efforts in Washington, D.C., and in the European Parliament to influence future trade negotiations.

A Forward‑Looking Perspective

As the global automotive industry moves toward electrification, the Munich motor show highlighted the delicate interplay between innovation, geopolitics, and trade policy. The three German giants’ united protest serves as a reminder that technology alone cannot resolve systemic economic friction—policy coordination is essential.

The discussion will likely continue over the next months as the U.S. administration reviews the impact of the tariffs, while European officials evaluate potential retaliatory measures. The stakes are high: a shift in the tariff policy could either pave the way for a smoother transition to electric mobility or, conversely, create a fragmented market that would benefit only a few domestic players.

For consumers, the outcome may translate into price changes and availability of models. For the automakers, the challenge will be to navigate an evolving trade environment while maintaining their commitment to sustainability and innovation. The Munich show—normally a stage for sleek cars and bold designs—has now become a crucible where the future of global mobility is being debated, one tariff at a time.