Some 15 Super Bowls ago, Chrysler wowed the viewing public with a long car commercial starring Eminem that featured the tagline “Imported From Detroit”. This was ironic, doubly so because the venerable automaker had been recently rescued from bankruptcy by Italy’s Fiat (it is now part of Stellantis NV). That paradoxical spirit is alive and well in the US-EU trade deal announced this weekend, with a kind of relief for European carmakers serving to emphasize the squeeze that President Donald Trump’s tariffs have put on America’s auto sector. Coming soon after another deal announced with Japan, however, Detroit may have reason for hope.
As with that deal, the US set tariffs of 15% on a range of imported goods, including autos. There’s been little more by way of details. Still, the levy being lower than what had been threatened, it offered that sort of qualified relief felt when you escape utter catastrophe and are merely maimed. The US imported about 800,000 vehicles from the EU last year — about 5% of the US market — and the new tariff represents a roughly 4 billion euro saving versus even higher penalties, according to Bloomberg Intelligence. BMW AG and Mercedes-Benz Group AG benefit especially due to the zero tariff set on US auto exports to Europe, since they are expected to send roughly 180,000 vehicles from US factories, mostly SUVs, back across the Atlantic this year.
That last figure is interesting because it represents virtually the entirety of US vehicle exports to the EU. In other words, the phrase “imported from Detroit” has virtually no meaning at all in Europe. BMW and Mercedes build their US-made vehicles in the South and Stellantis’ US exports to the EU amount to a relative handful.
As with the Japan deal, therefore, the relevance of the EU deal to the US automakers centers more on signaling than opening up a new market. Having largely retreated to the business of making heavier gas-guzzlers to serve American tastes, Ford Motor Co. and General Motors Co. may yet make some inroads in Europe with electric vehicles. GM recently announced the European launch of its six-figure Cadillac Lyriq-V, for example. But these are relatively marginal for the foreseeable future and must be set in the context of surging Chinese vehicle exports to Europe. Tesla Inc., meanwhile, might be expected to benefit until one remembers that its biggest challenge in Europe is selling the vehicles produced at its German factory after Chief Executive Elon Musk took a chainsaw to the company’s brand there.
