Germany’s automotive industry is grappling with what it calls an “incomprehensible” dilemma: a new US tariff that it believes will ultimately cause more harm to the United States than to Germany. The proposed 25% duty on imported heavy-duty trucks, according to the VDA trade body, is a self-defeating policy that will damage US jobs, investment, and supply chains.
The core of the German argument is that the transatlantic auto industry is not a simple one-way street of exports. German companies are massive investors in the US, employing over 120,000 American workers. Their US-based factories are key parts of a global supply chain. The VDA warns that tariffs would “further burden investment and jobs in the US” by disrupting this finely tuned system and raising costs for everyone.
This perspective challenges the “America First” narrative that tariffs are a straightforward tool for protecting domestic workers. The VDA’s statement implies that the policy is based on a misunderstanding of how the modern auto industry works. By penalizing major foreign investors, the US is inadvertently punishing some of its own largest manufacturing employers.
The market seems to agree with the German assessment of the potential damage. Shares in major manufacturers like Daimler Trucks fell on the news, reflecting investor fears that the tariffs would disrupt their profitable and deeply integrated North American operations.
This “incomprehensible” dilemma puts German industry in a difficult position. It is being targeted by a policy that it feels is economically illogical and counterproductive to the interests of both nations. Its only recourse is to lobby Washington and hope that economic reason will eventually prevail over protectionist impulse.