The European car industry has a problem with US tariffs. Your solution is surprising: India

An attack in a commercial war, a negotiation proposal and a closed door to lime and song. This can be summarized in the last days in the relationship between the United States and the European Union.

On April 2, Donald Trump confirmed that the 25% tariffs on cars and the pieces for their production that will go through their borders. At the same time, he also confirmed that he would apply tariffs to almost all countries in the world.

The base rate of these last tariffs is 10%. From there, the United States will apply tariffs that climb depending on the commercial deficit that has with those countries and that, according to its president, apply hidden commercial barriers. The European Union will pay 20%. Japan 24%. The threat already amounts to 104% for China.

The answers have been diverse. China answered the first tariffs raising commercial barriers, which has cost him the threat we wrote above. Japan has sent emissaries to try to reach an agreement. Europe has put its own proposal on the table: 0% tariffs in the two directions For cars and industrial goods.

The answer has been overwhelming. For Donald Trump this is not enough and is not open to negotiate in those terms. In the air a trade is at stake that in 2024 moved 38.9 billion euros. They are the ones paid by the United States for cars from Europe. To them we must add those manufactured by European companies in Mexico and Canada, to which these commercial barriers are also applied.

The measure is hard and puts a sector, that of the automobile, which uses more than 13 million people in Europe and did not cross their best moment. In China, European manufacturers are finding huge difficulties in placing their cars now that the market has set their eyes on local manufacturers.

In the United States, the production of the product only leaves three ways. One of them is to stop sending cars or stop selling them, as Volkswagen and Mercedes are doing with some models. The second option is manufacture locally But limiting the pieces that arrive from the outside, which is a expensive reinvestment. The third, and last, is to absorb tariffs to a greater or lesser extent and try to limit the rise in the final price.

All these options attack the results account of the great European manufacturers. Good because they will sell less, because it will cost them more expensive to manufacture or for the sum of both conditions. Therefore, they already look where their factories or their products can be transferred.

India seems to open the arms.

100% to 10%

The Indian market is unexplored by large European manufacturers. The difficulties in operating there are maximum. The example is totally contrary to Japanese.

In the Japanese country There are no tariffs to the importation of vehicles for local sale. However, the client is particular. In the big cities You can barely sell cars Because regulations on space force a parking space. They do not require Kei Caran extremely narrow and cheap type of car that in Japan dominates perfectly.

India, however, is a very protectionist country. Tesla knows the challenge. In 2016 he already tried to enter there opening reserves of their cars for 1,000 euros. Almost a decade later their owners did not have the car or money. Tariffs are 15%… as long as Do not enroll more than 8,000 units When it comes to an electric. An extremely low figure that discourages the industry to sell large amounts of vehicles. Especially since they demand three -year investments seen

In addition, so far they have had another problem. The potential client needs extremely cheap cars and with Very specific technical issuesas a free height to the ground higher than usual since the roads are in very poor condition. Adapting cars is a company to spend money on developing a product that must compete in extremely low prices.

However, Europe seems to be willing to reach an agreement with India. And India is willing to listen to Europe and open the door. This is what they maintain in Reuters which ensure that the European Union and the Asian country are looking for a Agreement to reduce tariffs of import that are now 100%.

In the news agency they point out, however, that although India is willing to reach a 10%tariff. Local manufacturers such as Tata or Mahindra press to impose their conditions. These are not going down 70% in tariffs on gasoline cars and gradually reduce tariffs up to 30% in successive phases. Of course, in the case of the electric car they do not want to reduce tariffs until 2029.

Negotiation comes just when the United States has also pointed in the same direction. As we counted, Tesla has long wants to enter the market but Negotiations have intensified Since 2023. A four million vehicle market is juicy enough to seek solutions now that relations between the United States and Europe harden.

Manufacturing in India is also an opportunity for manufacturers to give out to their lowest vehicles. The industry has long proclaimed that selling electric cars of 20,000 euros is not profitable in current conditions. That’s why Automotive News He pointed out that the Volkswagen Group has been evaluating this possibility. Carlos Tavares, at the head of Stellantis in 2022, I also pointed that India was one of the markets to conquer. And, according to ReutersByd has also shown interest in entering the country.

Photo | Suroor Haider and Volkswagen

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