Germany's biggest carmakers get highly affected by US tariffs

(MENAFN) Since April, significant increases in US tariffs on vehicles made in the European Union have severely affected Europe’s automotive sector. This has resulted in sharp profit declines for Germany’s leading car manufacturers and driven them to explore growth opportunities in Asia.

A recent agreement between the EU and the US reduced the tariff rate from 25% to 15%, temporarily easing tensions. However, experts caution that the relief might be brief, as high export costs and ongoing policy uncertainties continue to challenge Germany’s manufacturing industry and undermine business confidence.

Germany’s top three automakers—BMW, Mercedes-Benz, and Volkswagen—all experienced notable profit drops in the first half of 2025, with US tariffs identified as a major factor weighing on earnings.

BMW reported an 8.2% year-on-year decline in group revenue and a 29% fall in net profit, citing increased tariffs as a primary reason for weaker margins in its core automotive operations. Mercedes-Benz’s net income dropped sharply from approximately 6.1 billion euros ($7.08 billion) last year to about 2.7 billion euros ($3.15 billion).

Volkswagen Group saw a slight 0.3% decrease in sales revenue, with its premium brand Porsche facing particularly steep tariff-related costs estimated at around 400 million euros ($466 million) in the first half of the year alone.

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