Automotive News Europe — 2025-02-14
Automotive Industry
President Donald Trump’s threat to impose tariffs on imported vehicles puts a $240 bn trade route under pressure, with some of the biggest brands in Germany and South Korea among the most exposed.
Imports accounted for roughly half of the US auto market last year. About 80% of Volkswagen Group’s US sales are imported, while 65% of Hyundai-Kia’s U.S. sales are imported, according to figures from Global Data, a market researcher. Mercedes-Benz brings in 63% of its US deliveries from overseas.
Trump said on 13 February that cars were among the products he planned to hit with additional levies as he announced plans to apply reciprocal tariffs on numerous trading partners.
Trump said the product-specific tariffs would be applied at some point after reciprocal levies, which could go into effect as soon as early April.
Trump’s new 25% tariff on Mexican and Canadian imports from 6 March could strip €6 bn ($6.3 bn) from operating profit at Stellantis, Volkswagen, BMW and Mercedes-Benz, BI data shows.
Around 65% of the own-branded cars VW sells in the US are built in Mexico. That means it will need to increase capacity in the US or exit the market altogether, Stifel analyst Daniel Schwarz said.
A broad levy on all imported vehicles would have sweeping impacts across the industry. The US imported about 8 m new passenger cars and light trucks last year, with a total value exceeding $240 bn, according to Commerce Department data.
Decades of free trade agreements have helped make North America a hub for automotive manufacturing, with highly integrated supply chains across the continent.
Trump had already thrown that structural pillar into question by proposing a 25% tariff on all imports from Canada and Mexico that could take effect next month.
Ford CEO Jim Farley earlier this week warned that those duties alone would “blow a hole in the US industry that we have never seen.”