Trump’s Auto Tariffs: Impact on Europe and Belgium’s Economy Explained

Brussels – The decision by US President Donald Trump to impose a 25% import tariff on foreign cars and their parts starting April 3 has sent shockwaves through the global automotive industry.

The move, part of Trump’s “America First” policy, aims to boost domestic car production but is being met with strong opposition from European manufacturers and financial markets.

While the White House claims the tariff will lead to “tremendous growth,” global financial markets and industry leaders fear severe economic consequences.

The European automotive sector, already struggling with deindustrialization and competition from China’s electric vehicle (EV) market, now faces a significant blow to its exports.

Europe Faces Economic Fallout

Germany, the EU’s leading car exporter, is expected to be hardest hit by the tariffs. Car shipments to the US were worth €25.2 billion in 2024, followed by Italy (€3.4 billion) and Slovakia (€3.1 billion).

Eric Dor, director of economic studies at IESEG School of Management, warns that the tariffs will lead to “sharp declines” in European vehicle exports.

“If European exporters don’t lower their margins, US importers will see purchase prices increase by 25%, making European cars significantly more expensive in American showrooms,” Dor explained to The Brussels Times.

This is expected to lower demand and force European manufacturers to consider relocating production to the US, further accelerating Europe’s manufacturing decline.

Financial markets reacted negatively, with the STOXX Europe auto index falling by 2.3% on Thursday. German carmakers, including Mercedes-Benz and BMW, suffered combined market losses of €5.5 billion, while Jeep parent company Stellantis saw its stock plummet by 4.7%.

Belgium’s Auto Sector Under Pressure

Belgium, despite no longer being a major car producer, plays a crucial role in automotive logistics.

The Port of Antwerp-Bruges, the world’s largest roll-on roll-off (RORO) port, handled 3.1 million new cars in 2024. Any downturn in EU car production will impact Belgian logistics firms and suppliers.

Belgium exported €1.3 billion worth of cars to the US last year, a figure expected to decline. The recent closure of Audi Brussels in February has already weakened the sector, leaving Volvo’s Ghent plant as the last major auto manufacturer in the country.

The plant, known for producing the popular XC40, is preparing to expand its EV production line. The tariffs will also affect Belgium’s car parts industry, with companies like VCST, EFTEC, and Lear Corporation at risk.

Spare parts exports, which generated €180 million for the Belgian economy in 2024, will now face new trade barriers.

Additionally, the US has threatened tariffs on other key Belgian exports, including a 200% tax on alcohol, potentially disrupting the €44.5 billion beer trade between the two nations.

Wider Economic Risks

Belgian National Bank Governor Pierre Wunsch has warned that the tariffs could have inflationary effects across Europe.

“If tariffs impact growth and inflation, the European Central Bank may have to reconsider its rate-cut plans,” Wunsch told CNBC, hinting at economic turbulence ahead.

With the EU and US now on a collision course over trade, European leaders are bracing for a prolonged economic battle that could reshape the global automotive industry.

This article was created using automation technology and was thoroughly edited and fact-checked by one of our editorial staff members