EU-U.S. deal will bring 4 billion euros to auto giants. What's in store for Europe's car industry in the US?

The profits of European auto giants will grow by 4 billion euros after the EU-US deal. But the reduction of duties from 27.5% to 15% does not remove all the risks: the new duties still put pressure on the industry and make companies think about moving production to America.

BMW, Mercedes-Benz and other European automakers will get a 4 billion euro ($4.7 billion) boost to their profits thanks to a trade agreement the European Union has reached with the United States, reports Bloomberg. As part of the agreement, the duty rate on car imports from the EU will be reduced from 27.5% to 15%. 

In addition, BMW and Mercedes received duty waivers on about 185,000 vehicles they export annually from their U.S. factories, Bloomberg Intelligence analyst Michael Dean said in a note.

"This is the best possible result from a situation that looked very bad. I think German and Swedish CEOs will sleep much better tonight than they have in recent weeks," said automotive analyst Matthias Schmidt in comments late Sunday night. 

Shares of BMW, Mercedes-Benz, Porsche grew at the beginning of trading on Monday, but then lost growth. At the time of publication, the securities of these companies were falling within 1.5-2%, Volvo securities changed insignificantly.

The new duty rate is significantly higher than the previous one - before U.S. President Donald Trump launched his trade war this spring, the levies were 2.5%. The rise in duties is forcing companies to decide whether to raise prices or move more production to the U.S., Bloomberg writes.

For European automakers, the U.S. market was the largest foreign market in 2024, accounting for 22% of all EU auto exports, said data from the European Automobile Manufacturers Association (ACEA).

The trade agreement brings some clarity in an important market for Mercedes, BMW, Porsche and Volvo. Since Trump announced the new duties in April, automakers have warned of billions of dollars in additional costs and more complex supply chains. Several companies have been forced to revise or lower their financial forecasts for the year, Bloomberg notes.

The automotive sector is considered particularly vulnerable to duties, especially given the highly globalized supply chains and heavy reliance on manufacturing facilities across North America.

This article was AI-translated and verified by a human editor