As Donald Trump prepares to take office on January 20, Europe's already battered car industry is bracing for additional headwinds amid the threat of new tariffs from the incoming U.S. president. Trump has pledged to impose steep new tariffs on goods coming from China, Canada, and Mexico in one of his first acts in office, a promise that could ignite trade wars.
That is bad news for European automakers who have already seen sales and manufacturing decline in top markets like the United States and China. The potential tariffs would be felt hard not only by leading European car brands like Volkswagen, Volvo, and Stellantis -- the conglomerate that produces Fiat, Chrysler, and Citroen -- but also for the Central and Eastern European countries whose economies rely heavily on making them. Toma Savic, a former director at Zastava, a Serbian international car manufacturer that was shuttered in 2008, said the tariffs would be a particularly hard blow for operations in the Balkan country. 'This inevitably would lead to the shrinking of production in Europe and mass layoffs,' he said. Zastava later became Fiat Chrysler Automobiles Serbia, which is owned by Stellantis. Based in Kragujevac in central Serbia, Fiat Chrysler Automobiles Serbia has already been struggling to recuperate its foothold in the European auto industry prior to the breakup of Yugoslavia in the early 1990s when it assembled 200,000 cars annually and exported them to 26 countries. Germany's auto industry is also likely to be highly vulnerable to Trump's promised tariffs, especially given that Europe's biggest economy is by far the region's largest exporter of passenger cars to the United States. European and American carmakers could lose up to 17 percent of their combined annual core profits if the United States imposes import tariffs on Europe, Mexico, and Canada, according to some estimate
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