German Auto Sector Could Fall 12% if US Imposes Tariffs

Germany’s automotive sector could fall as much as 12% over “three bad trading days,” if President Donald Trump imposes tariffs on European car manufacturers, one analyst told CNBC.

Trump has until Friday midnight (Washington time) to decide whether to impose duties on car imports. This would likely hurt Germany, the EU’s traditional growth engine, given that it is one of the largest direct car exporters to the U.S.

The German stock market could fall as much as 6% and its automobile and components sector, specifically, could see losses of up to 12%, according to Christoph Schon, executive director of Axioma, a risk management solutions provider. He told CNBC over the phone that the losses could happen over a period of three trading days, or over five to 10 sessions.

Germany’s DAX is up by about 14% so far this year, while the overall European auto sector is higher by about 11% this year. Volkswagen and Daimler are up by around 7% and 15%, respectively.

Trump threatened to impose 20% tariffs on European cars back in 2018, arguing there’s a trade imbalance threatening the U.S.’s national security. The EU is the largest exporter of motor vehicles in the world, whereas the United States is the largest importer.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza