Trump Tariff Threats Put Pressure on DAX – Automakers Take a Beating
DAX retreats on Thursday from yesterday’s highs as Trump airs a 25% tariff on EU goods, including cars.
- 25% Tariffs on EU Trade
- Nvidia earnings beat failed to rally markets
- Automakers drop over 2%
The DAX loses 0.30% this morning after opening higher than yesterday’s close. Nvidia earnings beat was largely expected and did little to propel global markets as it has in the past.
Tariffs for the EU & Implications for the DAX
At a cabinet meeting held yesterday Trump said that the decision was made to implement 25% tariffs on EU trade.
Trump said the US would apply tariffs on EU goods “very soon” without specifying a date. Earlier statements on tariffs mentioned April 2 as the deadline.
The US president told reporters “It’ll be 25%, generally speaking, and that’ll be on cars and all other things.”
The discussion of tariffs arises from a broader view of how the EU, according to Trump, is designed to disadvantage the US.
The US has lately become Germany’s largest trading partner, overtaking China, which has seen a slump in demand for its goods. The stocks of companies in the DAX are heavily dependent on exports.
DAX Live Chart
Automakers Feel the Crunch
Car makers fell heavily today as the effect of tariffs on autos would likely reduce demand from US consumers.
Automakers are leading the decline in the DAX index. This morning all the major auto stocks were trading down, with Volkswagen losing 2.05%, Porsche -2.38%, Mercedes 2.04%, and BMW -2.44%.
The implementation of 25% tariffs on goods and autos from Germany would put a heavy dent in revenues for all companies.
Auto exports to the US make up around 30% of German exports to the US. Taking 2024 data of €161 billion in exports that’s around €48 billion in value for auto exports.
Oxford Economics estimates a 25% tariff would cause a drop of around 7% in car exports. While the Ifo Institute estimated a harsh 50% decline.
It’s more likely the real effect is somewhere in between those two figures, in any case it’s going to have a negative impact on the DAX in general all things equal.
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