Chancellor Friedrich Merz is “delusions” in his expectation that the German car -industry will be saved from American rates, according to EU officials involved in trade discussions with the Trump administration.
Merz has demonstrated the European Commission, who manages trade policy on behalf of the 27 Member States of the EU, to sign a “framework” agreement with Washington who signed the earlier this month of the US-OK agreement, including a special dispensation for cars.
But the Brussels officials have told Berlin Privé that such a scheme would not be possible, because reducing the import of German car is a big focus for US President Donald Trump, two people aware of the discussions told the Financial Times.
Earlier this week, Merz criticized the committee for the leading of “too complicated” negotiations and said that a deal should be aimed at four to five important industries, including automotive, steel and pharmaceuticals, where Trump has already threatened sectoral rates.
But committee officers say that this is the most difficult to remove because Trump wants to repeat these industries in the US and reduce imports.
EU negotiators are of the opinion that cars are ‘the most difficult element’ of every deal with the White House and must be handled after it was first agreed to build trust, the people said.
Berlin was ‘delusions’ to believe that Trump would agree to concessions for German car manufacturers as the first step, one of the officials said.
The disconnection between the EU director and the largest economy of the block came to the fore on Thursday at a top top in Brussels, where they were established to discuss the American trade relationship. Commission officials hoped that leaders would support a “credible threat” of retribution to get the deal through a deadline of July.
“I support the committee to quickly conclude a trade agreement with the US,” said Merz when he arrived at the top.
Trump has threatened 50 percent “reciprocal” rates for EU imports if no deal will be closed by 9 July.
In the meantime, so-called sectoral rates of 25 percent for cars and car parts, and 50 percent for steel and aluminum, are still in place and that also applies to most other imports.
Several countries are wary to make too many concessions to get a fast deal. Referring to the UK-US Agreement, a senior EU diplomat said that the block “should still hope that the EU with its 450 million people would have more trade power than the UK”.
A UK style carve-out would be complicated for the sector if it entails a quota system. Trump agreed to reduce a rate of 27.5 percent on British cars to 10 percent for the first 100,000 vehicles sent from the UK. A similar deal for the EU would have the Member States fight for the allocation of the quota.
Another senior EU diplomat said that “the mandate we gave to the committee … would go to the lowest possible rates”. They added that “10 percent is not the mandate that we have given”, referring to the UK, that the 10 percent tax on most goods accepted to stay in place.
If the deal is “not in balance”, the diplomat said, the EU would be “ready to implement”.
The block has already been agreed, but has suspended the application of retribution rates at € 21 billion of US goods and prepares a further package for € 95 billion in American products.
The German economy depends on exports and is particularly hard hit by the rates. ACEA, the body of the car industry, said that car manufacturers lost “millions” millions “. The German car industry accounts for around 5 percent of the country’s GDP.
The US is the second largest market for EU vehicles export after the UK. In 2024, more than 750,000 cars were exported, with a value of € 38.9 billion. The US exported 169,000 to the EU of € 7.8 billion value, according to ACEA.
Among the German car manufacturers, BMW is special Bullish that the US reduces its 25 percent rate from July. BMW director Oliver Zipse told investors in mid-May that the company was able to negotiate with the Trump administration from a position of “strength” as the largest American automotive exporter last year, which means that 225,000 vehicles worth more than $ 10 billion, from his factory in Spartanburg.
BMW, Mercedes-Benz and other European car manufacturers have pushed the US to allow a service program program, which would help them get repayments to import tariffs if they also export vehicles from America.
Senior executives of the top three German car manufacturers met Trump in the White House mid -April. Merz also raised the car problem with Trump when they met in the Oval Office earlier this month.
“I said that I am driving a German brand in an American car,” Merz said after the meeting by explaining the American president that many German car manufacturers, including BMW, produced vehicles in the US before they export them to Europe.
Although Merz has printed the EU to reach a deal with the US as quickly as possible, some German car manufacturers are less optimistic. “It’s a mixed bag at the moment,” said a car officer. “At the end of the day it is the EU that negotiates the US.”
Another person with a German car manufacturer said: “Negotiations seem to be a bit stuck. It is frustrating … that the EU will pass the time.”
