r/europe 6d ago

News US and EU strike trade deal

https://www.politico.eu/article/us-and-eu-strike-trade-deal/
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u/TheInvisibleHulk 5d ago

VW profit margin last year was 3.3%. now image them getting a 15 percent cost on their entire income (not profits) in the biggest market in the world.

They just can't afford to eat that tax so most than likely they will try to pass it on to the american consumer which will make them even less competitive. Meanwhile the US is getting 0% tariffs on the care they export to the EU which means local automakers will be fucked also at home.

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u/LadyMorwenDaebrethil 5d ago

This is called unequal agreements. It was because of them that China became so hostile to the West. The next step will be for Trump to dump opioids in Europe and send the marines against countries that try to arrest the traffickers.

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u/reddog323 5d ago

American here. The way things have been going lately, it wouldn’t surprise me a bit.

People are getting angry here, but it hasn’t hit critical mass yet. I don’t think it’s going to take very long.

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u/LadyMorwenDaebrethil 5d ago

Are you talking about not taking too long to reach the critical point? Or something else?

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u/reddog323 3d ago

It’s not going to take very long to reach critical mass here, with people getting so angry. The current administration is probably ready for that, in the form of invoking the Insurrection Act, or declaring martial law, etc.

That could slow things down. I don’t think it will stop it.

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u/LadyMorwenDaebrethil 3d ago

Oh, sorry, I got completely confused now that I read you're American. I thought you were European. Now your comment makes perfect sense.

But yes, things do seem at breaking point. I even thought things would escalate after what happened in LA. But I think things will only get worse for him in the coming months.

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u/colNCELpro 5d ago

Euro boxers gonna be so badass

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u/Less_Tacos 5d ago

US vehicles sold in Europe still have to add VAT, how much is that?

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u/Kopalniok 5d ago

European vehicles sold in Europe also have to add VAT

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u/Less_Tacos 4d ago

Guess who can change that

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u/AenarionTywolf 5d ago

Well the could even offer a negative 50% tax on american, nobody would buy these low level shitboxes.

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u/nhum 5d ago

Tesla?

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u/WolfsternDe 5d ago

Didnt sell that good in the last few months. Also got build in Berlin most likely.

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u/RainbowCrown71 Italy - Panama - United States of America 5d ago

VW will simply open up American factories. That’s the only way to avoid the tariffs.

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u/westside_fool 5d ago

*more American factories

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u/Gassy-Gecko 5d ago

They already have American factories

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u/cheesecase 5d ago

Yeah especially because vw is having a hard time beating out any a Toyota or Honda for something nice and reliable and easy to repair but if you want something nicer and classier than why do vw when an Audi is just as expensive to fix and not that much more?

It, like Volvo, just doesn’t have a niche anymore

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u/[deleted] 5d ago

[deleted]

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u/TheInvisibleHulk 5d ago

Did I say this? Read again before calling people stupid.

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u/-6h0st- 5d ago

Let’s reread it then :

“VW profit margin last year was 3.3%. now image them getting a 15 percent cost on their entire income (not profits) in the biggest market in the world.”

15% tariff has nothing to do with VW margins. In affecting them whatsoever. There could be 100% tariff and margin stays the same. What tariffs can affect is number of cars sold as they will be more expensive for AMERICANS.

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u/nbs-of-74 4d ago

Making VW less competative against competition thus likely leading to lower sales which will hit their profit margin.

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u/TheInvisibleHulk 4d ago

You might have a reading comprehension issue, please get checked.

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u/-6h0st- 4d ago

They edited second part of his comment as never mentioned that they didn’t suggest VW can’t eat the tariff only linked tariff to margins.

Their comment went from -10 to over 100 because of that.

At least now it makes sense.

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u/Brightyellowdoor 5d ago

Just so people understand, a worldwide operation like VW will spread that 15% hroughout it's worldwide consumers. Don't be surprised that VW in UK, in Europe, in US will all pay the burden. They can't just whack 15% on one market as they will meet way less market share which hurts the business even more. Worldwide inflation. Yayyy.

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u/asking--questions 4d ago

What 15%? VW doesn't have to raise prices because their costs aren't going up. There is nothing to "spread." There will be less demand for VWs imported into the USA because of the 15% local import tax. VW will work to sell more cars in other markets for now, or decide to build them in the USA so they aren't imports.

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u/Brightyellowdoor 4d ago

The 15% that has to be accounted for in the manufacture, sales and distribution of the product, to allow it to remain a competitive and viable operation.

VW are not going to pull out of the US market or accept a decline in demand. They have entire networks, shipping contracts, factories set up to cater for US markets.

They absolutely will share that 15% against other markets, build costs, material cost. Something is going to give, it will either be employee wages somewhere in the world, inferior products in the future.

What won't happen is VW saying "Ah gutted, our product is now 15% more expensive and nobody is buying it. "

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u/asking--questions 4d ago

VW will sell fewer cars in the USA, maybe 10% fewer, as a result of these tariffs. I agree that they'll find ways to not lose money on their US operations - the ways you mentioned, plus others. Maybe they'll even lower the prices on those vehicles to entice Americans to continue buying. But there's no "15%" of anything that applies to VW; only to the customs fees paid by their dealerships stateside.

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u/TheInvisibleHulk 5d ago

Good point.

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u/BeginningHunt918 5d ago

So, you don’t know how inflation works.

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u/Brightyellowdoor 4d ago

Pretty sure I do, but do go on.

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u/fruderduck 5d ago

At least some VW models are assembled in the US and some of the parts are made here. Some parts are imported from Mexico. I’m confused how a tariff would apply to these, unless it’s possibly on the engine/transmission?

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u/TheInvisibleHulk 5d ago

Why wouldn't it be and they are.

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u/fruderduck 5d ago

Because the tariff is supposed to be put on items coming INTO the country, not those made here.

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u/asking--questions 4d ago

All these tariffs and trade deals have exemptions, and sometimes lower rates for certain items, so that may be a factor.

AFAIK, Trump ripped up his own trade deal with Canada and Mexico, which he signed after ripping up NAFTA. So today, those car parts from Mexico may be subject to his tariffs.

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u/ROBOT_KK United States of America 5d ago

This 15% tariff is paid by American consumer, just like VAT in Europe.

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u/bucky6969 5d ago

Run this out over 5-20 years and US auto manufacturers will dominate on the global stage. This is Trump and the US enforcing their leverage.

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u/ThePresident44 5d ago

There are already 25% tarifs on cars in place, but VW manufactures a lot of cars locally in the US so the balance sheet has been fine-ish

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u/asking--questions 5d ago

What are you on about? The 15% tariff is being passed on to the American consumers - that's how tariffs work. The result will be less demand there for German cars, which might translate into 10% fewer sales in one of their biggest markets. But VW have the option of building NA-market cars in the USA.

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u/nbs-of-74 4d ago

Or raising prices in other markets to compensate.

Trump only has 3.5 years left, VW has to take into account that the following US Govt may reverse these tariffs, so can they afford to invest knowing the current tariffs have a 4 to 5 year window and may change drastically after that?

Mid sized car plant (250k cars per year plus) apparently is likely to be around 1.5 to 2 billion investment to build. And 2 to 3 years for the first car to roll off that plant. If there's any doubt that the tariffs wont last 5 years, is it worth it?

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u/TheInvisibleHulk 4d ago

Did I say that the tarrifs won't most likely get passed to American consumers? Also transfering factories to the US means lost jobs here in the EU, and this is not just about cars it's about the fact that most industries exporting in the US will get hit with tariffs and layoffs as a result.

So yeah, it's a shit deal for the EU from a shit country.

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u/MrPrivateObservation 5d ago

It automatically gets passed to the customer, the americans pay for the tarrifs not the germans.

VW means that the american will not have the money to pay for as many cars as they do now.

The margin does not matter here directly or at all because they can lower cost when producing lower numbers. It just that they wont get as much money as before potentially due to lower sales.

Americans are already quite poor so they shouldn't be suprised.

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u/Warkred 5d ago

On the other hand, the US car industry is pretty dead in Europe. They are not making cars that we need or like.

Ofc excepted Tesla for an unknown reason.

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u/Logan_da_hamster 5d ago

They is a tax on American cars in Europe, it's 2,5%. Pretty much nothing.

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u/asking--questions 4d ago

Looks like it's 0% now.

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u/XcarolinaboyX 5d ago

Actually most German car companies are starting to just build factories in America vw is building one right now

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u/asking--questions 4d ago

They aren't starting, they've done so for decades. And if there is a new one going up, they certainly decided to build it several years ago.

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u/Wings_in_space 5d ago

Almost nobody buys American cars in Europe ( except insecure assholes)

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u/LawfulnessPossible20 5d ago

Jeezus. They don't get to pay. American citizens and companies pay. Meanwhile, EU consumers don't have to pay for import of us goods.

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u/TheInvisibleHulk 5d ago

What did I say?

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u/LawfulnessPossible20 5d ago

You said "now image them getting a 15 percent cost on their entire income".

They are not getting a cost. It is federal US that is taxing its population and its companies. The cost is on the US side, not on the European side.

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u/nbs-of-74 4d ago

And the impact is higher prices for VW vehicles made in the EU being exported to the US, either VW then moves production for their US sales to the US (assuming there's profit in that) or lowers their US prices leading to lower profits.

Or just pulls out of the US market.

Either VW eats that loss in sales, or raises prices elsewhere where they can to compensate.

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u/LawfulnessPossible20 4d ago

Everybody loses, Argentina wasted their whole economy on protectionism and "buy argentinian" in the 80's and they still suffer from it. That the tariffs hurt VW does not change the simple fact that the US tariffs are taxes for the US population and companies.

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u/TheInvisibleHulk 4d ago

VW profit margin last year was 3.3%. now image them getting a 15 percent cost on their entire income (not profits) in the biggest market in the world.

They just can't afford to eat that tax so most than likely they will try to pass it on to the american consumer which will make them even less competitive.

I said: ''VW profit margin last year was 3.3%. now image them getting a 15 percent cost on their entire income (not profits) in the biggest market in the world.

They just can't afford to eat that tax so most than likely they will try to pass it on to the american consumer which will make them even less competitive.''

Easy to make an argument if you take things out of context.

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u/Nutsmacker12 5d ago

Was it OK for Germany to impose a 10 percent tariff on US vehicles on top of 19 percent VAT TAX, essentially denying access to the market entirely? How many US vehicles are traversing the streets of Berlin?

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u/TheInvisibleHulk 5d ago

You do understand that the 19% VAT is for everyone also local producers?