President Donald Trump’s announcement of a 25% tariff on imported automobiles and automotive parts last week has sent shockwaves through the global automotive industry, with estimates of severe implications for European manufacturers, writes eToro analyst for Romania, Bogdan Maioreanu.
The tariffs will take effect at the end of the day on April 2nd. Moreover, Trump already announced the same date as being the “Liberation Day” by introducing reciprocal tariffs. Trump has said his administration’s suite of reciprocal tariffs will apply to nations that charge fees on U.S. exports, promising to match those countries’ duties with tariffs of the same rate. And Romania might be on that list.
The U.S. imported $1.2 trillion more in goods in 2024 than it exported, and this is a source of frustration for the US president. But on April 2nd, each country will receive a number representing, in the opinion of US Treasury Secretary Scott Bessent, their tariffs. “For some countries, it could be quite low. For some countries, it could be quite high,” Bessent said in an interview.
Romania is one of the countries contributing to the United States’ trade deficit. According to the US Census Bureau, the governmental statistics data provider, in 2024, the US imported $3.77 billion worth of goods from Romania and exported only $1.35 billion, leading to a $2.4 billion deficit. While the figure might look big, it is far from the largest deficits the US has.
At the end of 2024, the US’s trade with China posted the largest deficit, with over $295 billion, followed by the trade imbalance with Mexico ($172 billion), Vietnam ($124 billion), Ireland ($86 billion), Germany ($85 billion), Taiwan ($74 billion), Japan ($69 billion), South Korea ($66 billion) and Canada ($63 billion). It remains to be seen how these reciprocal tariffs will be applied. But for sure, the automotive industry is preparing to receive in the next couple of days the full force impact of the tariffs on imports of cars announced at the end of last week.
The US remains the second largest market for new EU vehicle exports after the UK. In terms of value, the US accounted for 22% of the EU export market in 2024. But also, 9% of US vehicle exports have gone to the EU. In terms of value, the US accounted for 22% of the EU export market in 2024. The EU exported finished passenger cars and light trucks (under 5 tonnes), worth 39 billion euros or some 750,000 units to the US in 2024, according to ACEA.
The German automotive industry is one to be hardest hit by these tariffs. Companies like Volkswagen, BMW, and Mercedes-Benz export significant volumes to the US market. VW Group sells the most cars in the US, followed by BMW and Mercedes. Italian luxury manufacturers will face significant challenges. Ferrari has already announced price increases on some models in direct response to the tariffs.
Other Italian brands under the Stellantis umbrella (which includes Fiat and Chrysler) will also be affected, though to varying degrees depending on their US manufacturing footprint. French automakers, primarily through Stellantis (which includes Peugeot and Citroën but also Jeep, Dodge and Ram trucks), will face pressure as Stellantis produces only 57% of its inventory in the US. This leaves a substantial portion of their vehicles vulnerable to the new tariffs. Romania may be indirectly impacted due to its exports of components for German and French carmakers.
The tariffs will impact the North American auto industry too, where approximately 40% of US auto parts are sourced from Mexico and 10% from Canada. Around 60% of cars made in the US use imported parts, according to research from investment bank Berstein. Analyst Mark Delaney of Goldman Sachs said that the prices of imported cars could rise between $5,000 and $15,000 (€4,600 – €13,800), depending on the vehicle. Even models assembled in the US could see cost increases of $3,000 to $8,000 (€2,800-7,400) because of the use of foreign-sourced components.
In addition, North American integrated chains involving multiple border crossings for components from Mexico or Canada will be severely disrupted. Even Tesla – the most held stock by Romanian investors on eToro platform – despite its production located in the US but with an estimated between 60 to 70% of the parts manufactured there, mentioned the impact of Trump tariffs as “non-trivial”.
Amid this turmoil, the unlikely winners might be companies that do not manufacture any car but have these in large numbers in their fleets: rent-a-car and leasing companies. Hertz’s share price rose by almost 23% and Avis by over 20%. With the rising cost of imported vehicles, these fleets are more valuable assets. In a market where the purchase price of a new car could rise much, people may opt to lease instead of buying. The market has clung to the simplest levers: ready fleets, rising demand, and undervalued shares.
Donald Trump’s tariffs might also postpone Americans’ plans to buy new cars. And this might lead to a new surge in prices for the pre-owned cars. But if you’re not replacing your car, you’re fixing it. And parts sellers are suddenly becoming key players in this scenario. Shares of Advance Auto Parts, O’Reilly and AutoZone surged last week. Not just because customer traffic is growing, but because there’s a compelling story behind it: in a world of rising costs, used cars are becoming important, and maintenance is becoming a strategy.
