Potential Impact of Proposed Tariffs on Chinese Car Imports on German Auto Manufacturers

In today’s edition of Moody’s “German Breakfast – July Edition,” Perrine Bajolle, Assistant Vice President – Analyst in Corporate Finance at Moody’s Ratings, provided an in-depth analysis of the anticipated repercussions of the proposed tariffs on Chinese car imports. The report underscores that these tariffs could severely impact German car manufacturers, with BMW being particularly vulnerable due to its dual exposure.

Bajolle highlighted that BMW faces a unique challenge because it not only exports cars to China but also produces vehicles there. Some of these China-manufactured cars are subsequently imported back into Europe. This dual dependency places BMW in a precarious position, as it could be hit twice by the tariffs – once by the reduced exports to China and again by the increased costs of importing vehicles from China back to Europe.

We at RATING EVIDENCE conclude that policymakers must carefully weigh the broader economic implications of their decisions. The proposed tariffs, while aimed at protecting European interests, could end up undermining them, demonstrating the complex interdependencies in today’s global economy.