US tariffs spark criticism and economic concerns in Germany

US President Donald Trump’s decision to impose tariffs on Canada, Mexico, and China has drawn criticism and concern in Germany, with fears of economic fallout and rising consumer costs.

On Saturday, Trump ordered a 25% tariff on imports from Mexico and Canada and a 10% tariff on Chinese goods. He also hinted that the European Union (EU) could be next, citing the bloc’s persistent trade surplus with the US.

German leaders warn against tariff escalation

While reaffirming Germany’s commitment to economic ties with the US, Chancellor Olaf Scholz cautioned against trade barriers, stating, “The first priority should be not to divide up the world with many tariff barriers.”

Friedrich Merz, Chairman of the German Christian Democratic Union (CDU), criticized tariffs as an ineffective solution to trade disputes.

“Tariffs have never been a good idea to resolve trade policy conflicts,” Merz said, warning that rising import costs would fuel inflation and hurt American consumers.

Economic impact on Germany and the EU

Dirk Jandura, President of the Federation of German Wholesale, Foreign Trade, and Services (BGA), described the tariffs as “a clear warning to the EU and Ursula von der Leyen”, stressing that neither Germany nor the EU should remain passive.

“The losers are always end consumers, who will feel the price increase at the checkout,” Jandura added.

Impact on the automotive industry

German companies, especially automakers, are bracing for the impact, as many supply the US market from Mexico.

According to Handelsblatt, Mexico has been Germany’s most important investment location in Latin America, with total investments exceeding $45 billion since the 2000s.

• Volkswagen Group, which produces nearly 80% of its North American vehicles in Mexico and Canada, expressed concerns about the tariffs. A Volkswagen spokesperson warned of negative effects on American consumers and the global auto industry.
• According to credit rating agency S&P, Canada and Mexico produce around 5.3 million passenger cars annually, with approximately 70% exported to the US.
• S&P warned that importers would likely pass most, if not all, of the price increases to consumers, further straining affordability in the US auto market.

As tensions rise, Germany and the EU are evaluating their response, with growing concerns over a widening trade conflict.