European Automaker Stocks Surge Amid US-Japan Tariff Optimism

It’s impossible to predict whether there is a European automotive deal on the back of this US trade deal with Japan, however that is certainly what the markets are reflecting. A critical point of the deal was Japan’s commitment to invest half a trillion dollars into the US. Will Europe do the same? While the European automakers have significant investment plans in the US in their pipeline, the figures do not come close to Japan’s commitment.

Companies such as BMW BMW and Mercedes MBG have spoken with extreme confidence in reaching a deal that allows for the netting of imports and exports. For every car that they export from the US, they can import one car either duty-free or at a reduced duty. The Japanese-US trade deal indicates that there is negotiating room to be had around import duties on cars coming into the US.

EU negotiators have also proposed removing their 10% duties on US car exports if the US reduces its duties on the sector to below 20%. The 15% duty agreed with Japan implies that a duty below 20% is viable.