The Trump administration has announced plans to impose steep tariffs on imported vehicles, with German automakers including Volkswagen Group directly in the crosshairs. The Ifo Institute has warned the measures could tip Germany's already fragile economy into recession. Separately, polling data shows Trump's domestic political standing on trade and inflation is eroding — with approval among under-30s dropping from 48% in January 2025 to between 25% and 33% recently, and 78% of young Americans disapproving of his inflation handling.
Auto tariffs hitting German manufacturers create direct earnings pressure on Volkswagen Group and the broader European industrial supply chain. For US investors, this raises costs for American auto dealers and consumers while increasing recession risk in Germany — Europe's largest economy — which can drag on EU-exposed equities and the euro. Fading domestic political support for the tariff agenda is a wildcard: it could either accelerate a policy reversal or entrench it as the administration doubles down.
Ongoing: EU formal response and potential retaliatory tariff announcements. Watch for Volkswagen Group (VOW3) earnings guidance updates. Monitor next German GDP and Ifo Business Climate Index releases for recession confirmation signals.
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