An Uneasy Alliance: German Automakers and the US Economy

An uneasy alliance exists between German automakers and the US economy, one that has been thrown into sharp relief by Donald Trump’s threat of a 25% tariff on imported trucks. While the tariff is presented as a measure to protect American industry, German auto bodies argue it will do the exact opposite, harming the very economy it claims to help by disrupting a deeply intertwined industrial relationship.
The core of this alliance is the sheer scale of German investment in the United States. The German auto trade body, the VDA, was quick to point out that its member companies employ more than 120,000 people in the US. These are American jobs in factories across the country, building cars and trucks for both domestic sale and export. The tariff threatens this ecosystem by raising costs and potentially reducing the competitiveness of these US-based plants.
The VDA’s warning that the tariff would “weaken supply chains” highlights another aspect of this uneasy alliance. German-owned factories in the US rely on a seamless flow of parts and components from around the world, including Europe. A trade war disrupts this flow, creating inefficiencies and driving up production costs for vehicles made in America.
The reaction of the stock market, with shares in Daimler and Traton falling, shows that investors understand this dynamic. They recognize that a tariff on trucks is not just a tax on German companies, but an attack on the complex, transatlantic business models they have built over decades—business models that are now a core part of the US manufacturing base.
This situation reveals the central paradox of the tariff policy. In an attempt to shield the US economy from foreign competition, the administration is taking aim at some of the largest foreign investors and employers within its own borders, risking a self-inflicted wound to its own industrial strength.