German Chancellor Friedrich Merz has called for pragmatic trade strategies and flexible automotive regulations at the IAA Mobility trade show, highlighting the sector’s critical role amid rising tariffs and global market shifts.
At the recent IAA Mobility trade show in Munich, German Chancellor Friedrich Merz made a pretty clear statement against protectionist policies and tariffs. He pointed out how these measures generally have a broad negative effect on global trade—especially in the automotive sector. Merz emphasized that innovation needs to be the main strategy for staying competitive as challenges from China and the US continue to grow. It’s worth noting that he highlighted just how vital the automotive industry is to Germany’s economy. He made it clear that without this sector, the country could face pretty serious economic decline. His speech also illustrated Germany’s stiff opposition to rising trade barriers, like the 15% tariffs that the US has slapped on European imports—which he called damaging for both sides.
This position of Merz's really echoes wider worries expressed by industry folks at the event. European automakers are already feeling squeezed with rising costs tied to electrification, and the global market is shifting rapidly. Chinese carmakers, like BYD, Changan, and GAC, are expanding their footprint in Europe—almost doubling their market share to about 4.8% by mid-2025—which adds extra pressure on European brands that are already trying to adapt. Interestingly enough, Merz also urged the European Union (EU) to pursue a more flexible, pragmatic approach to electric mobility, pushing for rules that support sustainability but don’t crush innovation. This fits with lots of industry concerns about the EU's planned ban on internal combustion engine sales by 2035. Some industry leaders, like BMW’s CEO Oliver Zipse, have called that plan ill-advised, especially given current market realities and tech development.
Merz’s criticism of tariffs and stiff regulations isn’t just talk. It goes along with his broader effort to keep Germany’s automotive sector safe from unfavorable trade policies. He was quite vocal about the recent EU-US trade deal, which still includes a 15% tariff on European cars exported to the US. That’s a step back from the initial threat of 30% tariffs, but it’s still a hindrance—especially for exporters. These tariffs just pile on top of the challenges the industry already faces, like declining demand in China and slower-than-expected growth in electric vehicle sales. He also announced plans to hold a high-level summit with key industry players—OEMs and suppliers included—in the next four to six weeks. It signals he’s serious about tackling these issues proactively and protecting Germany’s automotive future.
That said, Merz’s approach hasn’t been universally praised. Some folks within and outside the EU called his hopes for an exemption for German automakers from US tariffs a bit unrealistic, especially given the protectionist mood evident in recent US trade moves. Negotiations are complicated, and there are threats of even higher US tariffs if a deal doesn’t happen, not to mention the EU’s plans to retaliate with tariffs of its own. So, it’s really a tightrope walk between defending Germany’s industrial interests and managing broader diplomatic and trade relations. And let’s not forget, Germany’s auto industry contributes around 5% to the country’s GDP—so, you see, it’s a pretty significant piece of the economic puzzle.
On top of that, Merz voiced opposition to some strict EU regulatory proposals—like mandates that would require rental companies and large firms to buy only electric vehicles by 2030. He argued such policies could lead to an early and potentially damaging transition before EV tech is fully ready for mass adoption. Instead, he’s advocating for more flexible, technology-neutral policies that reflect real market and technological developments—probably a wise approach, given how fast the EV scene is shifting.
All in all, Merz’s address at the IAA Mobility truly encapsulates Germany’s delicate balancing act amid a turbulent global automotive environment. His call for innovation, adaptable regulation, and more industry dialogue shows a clear understanding of the tough challenges faced from China and the US, the rapid push towards electric vehicles, and the importance of keeping Germany’s famed automotive industry competitive under increasingly complex global trade pressures. Honestly, it’s going to be interesting to see how these strategies develop over the next few months.
Source: Noah Wire Services
