German officials warn world US tariffs distort market, highlight trade ties with China

GERMAN officials have warned the world that U.S. tariffs will distort the global market and benefit no one, underscoring the importance of international cooperation and the thriving trade relationship with China.

AI Brief

US tariffs on EU cars caused major profit drops for BMW, Mercedes-Benz, and Volkswagen.
A new deal capped auto tariffs at 15%, but German industry leaders urge further reductions.
Germany is strengthening trade ties with China to offset losses and boost tech collaboration.

Since April of this year, the U.S. has wielded the tariff hammer by significantly increasing tariffs on automobile imports from the European Union (EU), severely impacting the European automotive industry.

This move has pushed major German car manufacturers into a "profit winter," marked by sharply declining earnings.

In its financial report released at the end of July, BMW Group posted a 29 percent drop in net profit for the first six months, to 4.02 billion euros (4.6 billion U.S. dollars), marking its third consecutive year of first-half earnings decline.

Mercedes-Benz was hit harder. The premium brand reported a 56 percent plunge in net profit to 2.7 billion euros for the first half, down from 6.1 billion euros a year earlier.

Volkswagen Group also reported a 33 percent fall in first-half operating profit, citing around 1.3 billion euros in additional costs related to U.S. tariffs.

The three German auto giants together account for around 73 percent of all EU car exports to the United States last year.

While the EU and the United States reached a deal at the end of July to cap auto tariffs at 15 percent, German industry remains wary.

Hubert Aiwanger, Bavarian State Minister for Economic Affairs, Regional Development and Energy, stressed the need for ongoing negotiations to further reduce these tariffs.

He also highlighted the strengthening cooperation between Germany and China.

"I firmly believe that we must continue to negotiate further reductions in U.S. tariffs on Europe, as tariffs only harm the economies of both sides. The Germany-China trade partnership is thriving, and I believe the two sides are highly complementary. We are also pleased to establish an equal and good cooperation with a trade partner that produces high-tech products just like us. By combining German technology with China’s innovation and digital capabilities, we can jointly produce higher-quality products for the global market," said Aiwanger.

Kurt Kapp, head of economic development in Munich, echoed these sentiments.

"Tariffs always distort market competition, and we believe they are fundamentally detrimental to the economic development of all parties involved. We value technological cooperation within Europe and also place great importance on our collaboration with China. In recent years, China has developed rapidly as a technology partner, and we look forward to continuing to work together," said Kapp.