The European Union’s automotive sector over the last five years has recorded a dramatic decline in productivity and production
Washington – Donald Trump’s announcement of a 25% tariff on medium and heavy-duty trucks imported into the United States starting November 1, 2025, reignites the fuse of global protectionism and presents the European industry with a new, severe warning. The move, aimed at “protecting the American industry” and bringing production shares back to US soil, comes at a critical time for the European Union’s automotive sector, which over the last five years has recorded a dramatic decline in productivity and production, squeezed between rising energy costs, geopolitical disorder, and Asian competition. An analysis of how European structural weakness amplifies the risk of new trade barriers.
The new US tariff represents a clear signal of a return to the “America First” agenda and initially focuses on the heavy vehicle supply chain, a crucial segment for global logistics and the economy. Although the immediate impact is more concentrated on Mexico, which is the main exporter of trucks to the US, the measure does not spare large global groups with European roots and significant plants in the North American region, such as Stellantis and Volvo Group. The 25% tariff is a direct cost increase for imports, but also a potential rupture of integrated value chains, particularly those established under the USMCA agreement. Washington’s move aims to strengthen manufacturers like Peterbilt, Kenworth, and Freightliner, but creates significant diplomatic and trade friction. For Europe, already dealing with tariffs on Chinese electric cars, Trump’s initiative is a further element of geopolitical and economic pressure that threatens the principle of free trade and pushes towards market fragmentation. The US market, fundamental for European exports (including the premium segment), is no longer a guarantee.
The threat of tariffs comes in a European context already deeply marked by a structural competitiveness crisis. Data from the last five years, between the post-pandemic period, the semiconductor crisis, and the energy shock, outline a picture of a drastic retreat in terms of production and employment which, overall, has caused the industry to lose a significant portion of its production capacity. The automotive industry, which represents about 7% of the EU’s GDP and 8.5% of manufacturing employment, is struggling. From 2020 to today, the auto components sector has recorded the loss of approximately 86,000 jobs. The decline in production reached dramatic peaks in the main producing countries: Italy suffered the most significant decrease, with a 43.4% drop in production. Followed by Belgium (-31.2%) and France (-12.4%), while even Germany, the EU’s largest producer, recorded a modest decline of 0.4%. This data (processed by ShipMag from recent analyses cited by the Chamber of Deputies and sector reports) indicates not only a loss of volume due to exogenous events but also a differential in structural competitiveness. Nominal unit labor costs in the EU automotive industry were historically 30% to 40% higher than Chinese ones in the period 2010-2018.
To this is now added the high cost of batteries, which accounts for 30-40% of the value of an electric vehicle and for which Europe is still heavily dependent on imports. The ecological transition, although necessary for sustainability, is accelerating this erosion of market share in favor of competitors with verticalized supply chains.
The convergence between internal European fragility – translated into a multi-year loss of productivity and a strategic delay on key components – and external commercial aggression – manifested by US tariffs and Chinese pressure – places the EU industry in a position of extreme vulnerability. The new Trump tariffs on trucks, although not primarily aimed at Europe at this stage, are an explicit warning that future obstacles could affect any segment of European exports. The European Commission, while recognizing the risk of losing significant market share, struggles to formulate a cohesive industrial policy that does not rely solely on defensive measures. The Draghi report on competitiveness highlighted the need for a turning point: massive investments in strategic autonomy, especially in batteries and critical raw materials, and a regulatory simplification that restores productivity margins to companies. In the absence of a strong community response and a rapid recovery in production indices, the European automotive industry risks not only continuing its production decline, but also seeing its role as a global leader definitively overshadowed, crushed between US protectionism and the unstoppable advance of low-cost, high-production-efficiency vehicles from Asia. The final bill of this structural crisis risks being paid, in addition to productivity, in jobs and in critical technological innovation.
