President Donald Trump’s threat to raise tariffs on European allies as part of his push to fold Greenland into U.S. territory, is sending a new round of shockwaves through the auto industry.
The details: On Saturday, Trump said he will impose 10% tariffs on Denmark, Norway, Sweden, France, Germany, the Netherlands, and Finland (on top of existing tariffs) by Feb. 1 if they try to impede his efforts to make Greenland a self-governing Danish territory under the U.S., reports CNBC.
The 10% tariffs would rise to 25% in June unless a deal is reached for the U.S. to purchase Greenland.
Shares of German automakers Volkswagen, BMW, and Mercedes-Benz were down more than 2.5% on Monday morning following Trump’s announcement.
At one point, Stellantis (based in Milan) saw its stock fall around 2.1% on Monday.
What they’re saying: “If we do get tariffs, and, of course, we have to see how the geopolitical situation pans out, then … the chemicals, industrials, autos sectors, these will be the most impacted, which directly feeds to German growth,” said Mohit Kumar, chief European economist at Jefferies. (CNBC’s “Europe Early Edition).
Why it matters: For dealers selling European brands, higher tariffs can translate into higher MSRPs, tighter allocations, and slower product cycles, all of which affect payments, demand, and used values. How European OEMs respond on pricing, incentives, and U.S. production plans will impact showroom traffic and competitiveness across luxury and import segments.
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Between the lines: If enacted, the new levies tied to Trump’s Greenland push would deepen the tariff hit German automakers are already absorbing.
Volkswagen said in October it expected a tariff hit of up to 5 billion euros ($5.8 billion US) in 2025.
Mercedes-Benz indicated in July that tariffs could cut 362 million euros ($418 million US) from adjusted operating profit (EBIT) in 2025.
German car exports to the U.S. dropped by almost 14% in the first three quarters of 2025, due largely to tariffs.
Bottom line: Trump’s Greenland tariff threat adds another layer of uncertainty and cost pressure for European automakers and their U.S. dealer networks, but the ultimate impact will hinge on whether the levies are implemented, how long they last, and how aggressively OEMs adjust pricing, incentives, and sourcing in response.
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