President Trump wants Americans to buy fewer European cars and Europeans to buy more American cars. To speed his pipe dream along, on Sunday night he said that new tariffs on EU companies would “definitely happen.” (The ones on Mexico and Canada have been stayed for now.) His threat of 25 percent tariffs on, among other things, car imports from the EU could spark an automotive trade war.
Market reaction to this was predictable: European automaker shares fell yesterday. Stellantis and Volkswagen were down 6.8 and 5.6 percent respectively. Volvo fell by 6.5 percent, while Mercedes Benz, BMW and Porsche lost between 3.6 and 4.3 percent.
Despite his Bavarian ancestry, Trump has a special beef with German cars. In a 2018 report from the German magazine WirtschaftsWoche, Trump told French President Emmanuel Macron that he wanted no more Mercedes rolling down New York’s Fifth Avenue. And, according to several unnamed European and US diplomats, Trump also asked Macron why so Germans buy so few Chevrolets yet American drivers choose BMWs.
The accuracy of this conversation was confirmed in November last year when former German Chancellor Angela Merkel told Italian news outlet