Germany's VDA car association says main tariffs affecting car industry were not subject of SCOTUS ruling

Germany's VDA car association says main tariffs affecting car industry were not subject of SCOTUS ruling

The German automotive industry association VDA has clarified that the recent U.S. Supreme Court ruling against President Trump’s tariffs under the International Emergency Economic Powers Act (IEEPA) does not address the core tariffs currently impacting the sector. While the Court’s 6-3 decision invalidated tariffs imposed via IEEPA, existing U.S. tariffs on European cars and parts—set at 15% for passenger vehicles and 25% for commercial vehicles—remain unaffected, as they were implemented under separate legal frameworks.

The VDA emphasized that these ongoing tariffs, alongside additional duties on steel and aluminum, continue to pose significant challenges for German automakers. The association noted that the U.S. and EU reached an agreement in August 2025 to reduce tariffs on European vehicles retroactively, but current rates still represent a "substantial burden". This comes amid broader pressures on the German automotive sector, including declining production forecasts and intensifying competition from Chinese electric vehicle (EV) manufacturers, which have captured 34% of global vehicle production in 2024.

The Supreme Court’s ruling primarily targeted tariffs justified under IEEPA, such as those on imports from China, Mexico, and Canada, which were deemed an overreach of executive authority. However, the Trump administration has signaled intent to reimpose tariffs using alternative statutes, such as Section 122 of the 1974 Trade Act, which allows temporary tariffs to address trade imbalances. These measures, limited to 150-day periods without congressional approval, could further complicate global supply chains.

For the German industry, the VDA reiterated the need for improved transatlantic trade frameworks and accelerated free trade agreements to counter rising costs and global competition. While the Supreme Court’s decision may reduce some tariff-related pressures, the association stressed that structural challenges—including China’s dominance in EV production and raw materials—require long-term strategic responses and address the sector's declining production capacity.

Investors should monitor upcoming U.S. trade policy shifts and the EU’s efforts to bolster industrial competitiveness, as these factors will shape the automotive sector’s financial outlook in 2026 and beyond.