Vehicles are assembled on a line at the BMW plant in Leipzig.
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Shares of Europe’s top carmakers rose on Wednesday after the U.S. and Japan’s blockbuster trade agreement raised hopes of a tariff breakthrough for other major exporters.
In a post on social media platform Truth Social, Trump described the “massive” trade agreement as “perhaps the largest Deal ever made.”
The deal is expected to mean U.S. tariffs on imported Japanese vehicles and parts will fall to 15%, a significant drop from the existing 25% rate that is levied across countries.
Japanese Prime Minister Shigeru Ishiba welcomed the trade agreement, saying it marks “the lowest figure among countries that have a trade surplus with the U.S.,” according to Reuters.
Germany’s Volkswagen, BMW and Mercedes-Benz Group were all up more than 4% on the news, shortly after European markets opened. Luxury automaker Porsche soared 7.1%.
French car parts manufacturer Valeo rose 4%, with Jeep maker Stellantis up around 5.4%.
In a speech that followed his Truth Social post, Trump said the U.S. and Japan were concluding an additional deal involving liquified natural gas, adding that “we have Europe coming in tomorrow,” without specifying details.
The automotive sector is widely regarded as acutely vulnerable to tariffs, particularly given the high globalization of supply chains and the heavy reliance on manufacturing operations across North America.
In Japan, auto exports to the U.S. are pivotal to the health of the world’s fourth-largest economy, accounting for 28.3% of all shipments in 2024, according to customs data.
Citi economist Katsuhiko Aiba said Washington and Tokyo’s deal to lower reciprocal and auto tariffs to 15% could influence the course of talks with other major auto exporters.
“It is notable that auto tariffs were reduced without any cap on auto exports for a major auto exporting country, which may have implications for negotiations with the EU and South Korea,” Aiba said in a research note.
The European Union has long been scrambling to reach a deal with the U.S. to lower auto tariffs.
Trump, however, recently sought to ramp up pressure on the 27-naiton bloc by threatening to raise levies on EU imports to the U.S. to 30% from Aug. 1, if no agreement is reached before that time.
— CNBC’s Lim Hui Jie contributed to this report.
