New U.S. Tariff Threat Could Make European Cars Much More Expensive
While some U.S. automakers are set to enjoy up to $2.3 billion in tariff refunds, European automakers that have been dealing with a 15 percent import tariff may see that fee jump to 25 percent after President Trump's latest threat. That's a huge hit, according to Automotive News, which reports that analyst company Bernstein has calculated the move could cost EU carmakers an additional €3.5 billion ($4.1 billion) in profits this year, and another €5.7 billion ($6.6 billion) in 2027. The move is intended to force European automakers to move production to the U.S. "much faster," Trump told reporters, but the increase isn't set in stone just yet, which is good news, as it could force automakers to radically revise pricing.
America and the EU Are at Odds
Trump posted to his Truth Social network that the EU hadn't fully complied with a U.S. trade agreement, but the EU says it's unclear on how it's not holding up its end. One potential reason may be that the EU has not yet ratified the September 2025 agreement that would see the tariffs on EU-made vehicles lowered from 27.5 percent to 15 percent in exchange for the EU dropping tariffs on all U.S.-made products. But legislation in the European Union takes a long time to be approved. To find more clarity, EU negotiators will meet in Brussels this Wednesday, hopefully finding a solution soon, because European automakers' lobbying group ACEA says the U.S. made up 18.4 percent of the EU export market last year, second only to the United Kingdom.
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According to Matthias Schmidt, an independent auto analyst in Germany, Audi and Porsche are among the most exposed automakers because they do not currently produce any vehicles in North America. Porsche has its hands very much tied because much of the prestige of the brand is based on the fact that all its cars are made in Germany. BMW Manufacturing, meanwhile, is still the largest U.S. automotive exporter by value for the 12th year running, with its Spartanburg, South Carolina, plant accounting for almost 200,000 vehicles, or $9 billion. So, how will this affect the automakers and, subsequently, buyers?
Big Losses Expected for BMW, Mercedes, Porsche, and VW
According to Bernstein, BMW Group's earnings before interest and taxes (EBIT) could fall 12 percent in 2026 and 15 percent in 2027. Mercedes-Benz Group could see earnings drop 14 percent this year and 18 percent in 2027, while Porsche could take a 16 percent hit this year and a further 21 percent in 2027. Volkswagen Group could face a 9 percent headwind this year and an 11 percent hit next year, and Stellantis could be hit with a 21 percent drop in earnings in 2026 and a 19 percent hit in 2027. Bernstein says at least half of these costs could be passed on to buyers. Of course, automakers, including Stellantis and Mercedes, have also been able to book anticipated refunds for Q1 2026 after the U.S. Supreme Court ruled in February that many of Trump's tariffs were illegal, but that will be of no comfort to buyers who have already been saddled with increased sticker prices.
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This story was originally published May 4, 2026 at 5:15 PM.