Is the German automotive industry ready for Trump’s comeback?

With the end of the US elections in sight, the signs point to a Trump victory. The possible return of the former president could have significant consequences for the German automotive industry. Known for his “America First” policies and protectionist views, Trump has left a clear mark on the global economy during his first term. But what would another Trump term in office mean for German manufacturers such as BMW, Volkswagen and Mercedes-Benz?

Impending tariffs on German cars?

Trump has previously threatened high import tariffs on European cars to boost US production and increase import costs. If he wins the election, these threats could become reality. For German car manufacturers, additional tariffs would be devastating and would significantly weaken their competitiveness on the US market. A study by the Center for Automotive Research has shown that a 25% tariff on German cars could jeopardize up to 370,000 jobs in Germany and increase car prices in the U.S. by billions.

Relocation of production to the USA

Another Trump victory could force German manufacturers to increase production in the US to avoid tariffs. Companies such as BMW, Mercedes and Volkswagen already operate large plants in the U.S., but may need to expand them further to take advantage of potential tax incentives or subsidies. However, this strategy is associated with high costs and limited flexibility, as not all models can be produced profitably in the USA. Although the US market is important for German manufacturers, it remains questionable whether this drastic step would be financially viable in the long term.

Support for US manufacturers: subsidies and competitive advantages

Trump’s policies could also introduce special subsidies and tax benefits for American manufacturers, allowing them to reduce their production costs and capture a larger market share. For German car manufacturers, this means increased competition both in the USA and worldwide. Competitors such as Ford and Tesla, which are investing heavily in autonomous systems and software platforms, would benefit from such measures and gain an even greater advantage. The rapid development of U.S. technology companies underscores how important the focus on software and digitalization is for competitive advantage.

Looser emissions standards: a step backwards for sustainability

A Trump victory could also lead to a withdrawal of emission standards. During his first term, Trump withdrew from the Paris Climate Agreement and relaxed several environmental regulations. A return to the White House could mean relaxed or even lifted emissions targets. This would be a major setback for German car manufacturers that have invested heavily in low-emission and sustainable vehicles, as their investments in e-mobility and alternative drives would be less attractive in a market with reduced environmental standards. Such a change could also have broader effects worldwide and delay progress on climate protection.

Threat or opportunity?

Trump’s possible return could have a significant impact on the German automotive market, forcing manufacturers to adjust their strategies. While Trump’s protectionist policies may seem threatening, they could also offer opportunities—such as increased local production and new partnerships in the U.S. market. However, it remains to be seen whether German car manufacturers will be able to master these economic and structural challenges. The automotive industry is at a critical juncture: can it successfully manage these changes and maintain its position in the US, or will economic and political risks become insurmountable obstacles?