US President Donald Trump’s escalating threats to impose tariffs on European countries and car manufacturers have hit the automotive industry hard, with shares of major automakers trading lower on Friday. The 25% tariff rate on European cars and goods is part of a series of trade measures aimed at rebalancing the economic order in America’s favor.
Analysts expect the auto tariffs to have a profound impact on the industry, citing its heavy reliance on manufacturing operations across North America, particularly in Mexico, and complex global supply chains. “The general story is that all [carmakers] are highly globalized and so it will affect them all,” said Rico Luman, senior sector economist for transport and logistics at Dutch bank ING.
European car manufacturers have already announced significant investments in US production to mitigate the impact of potential tariffs. Germany’s Volkswagen plans to double its market share in the US, while Stellantis is set to invest over $5 billion in the region. Analysts warn that higher duties could significantly impact export strategies and lead to further investments in US manufacturing capacity.
The automotive industry faces significant challenges ahead, with many companies struggling to absorb the costs of potential tariffs. “For automakers like BMW and Mercedes, who already have substantial US production, higher tariffs could influence their export strategies, potentially reducing productivity and limiting export revenues for the US,” said Rella Suskin, equity analyst at Morningstar.
As trade tensions escalate, global markets remain uncertain, with many companies closely monitoring further developments. The impact of Trump’s auto tariffs is expected to be felt across industries, highlighting the need for caution and careful planning in the face of increasing protectionism.
Source: https://www.cnbc.com/2025/03/03/auto-giants-scramble-to-suffer-the-least-amid-trump-tariff-threats.html