Germany welcomes US retroactively lowering tariffs on EU cars to 15%

German Economy Minister Katherina Reiche on Thursday welcomed the US retroactively lowering tariffs on EU cars and car parts to 15% as of August 1.

In a Federal Register notice, the US Commerce Department and the US trade representative said they had implemented the modifications included in the August trade framework agreement struck between Washington and Brussels after the EU introduced "the necessary legislative proposal to enact the EU tariff reductions."

Under the amendments, tariffs on EU cars and car parts went down from 27.5% to 15% as of August 1, effective on Thursday. Before US President Donald Trump took office in January, the levy stood at 2.5%.

A number of other EU goods - including aircraft and aircraft parts, generic pharmaceuticals, chemical precursors and "unavailable natural resources" like cork - have been exempted from US tariffs, accoridng to the notice.

Reiche said the reduction means car manufacturers can plan more reliably, but warned that the tariffs remain "a considerable burden – for manufacturers and, in particular, for our suppliers, most of whom are small and medium-sized enterprises."

She said the levies were part of a challenging geopolitical environment, marked by increased protectionism, global overcapacity and insecure supply of resources.

"The current situation makes one thing clear: Germany must do its homework. The seas have become rough, and we must make our ship seaworthy again," Reiche stressed. "It's about regaining our competitiveness."

Industry experts believe German car manufacturers will shift production to the US in the medium term to bypass the tariffs.

Meanwhile, they will have to brace for increased competition from US brands, as the EU agreed to let US cars to enter the bloc duty-free in exchange for the reduction.