Donald Trump announced on Wednesday that European products will sign 25% of the customs “soon”.
The U.S. president has been dissatisfied with the EU, claiming that Europe does not buy American cars or agricultural products.
According to Moody’s, half of the vehicles sold by European manufacturers in the United States are imported, with 785,000 worth $44 billion in 2024.
If the tariffs come into effect, automakers can absorb some of the costs in profit margins or prices, Moody’s said.
But another U.S. analyst said in early February that a 25% tariff would eliminate any profit.
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Repositioning production
German automakers will be particularly affected as they export most of their high-end models to the United States. The German Automobile Manufacturers Association (VDA) said the announced 25% price is “provocative” and will make U.S. customers “more expensive.”
Volkswagen is made in all Audi and Porsche models outside the United States. But Audi, which has a factory in Mexico, has long been considering opening a factory in the United States.
BMW and Mercedes export sedans from Europe, but they also have factory-made SUVs (Americans’ favorite cars) based on the US, such as the BMW X5 and the Mercedes Gle.
They will evade the custom of selling in the United States, but exports of these SUVs will be hit if they decide to retaliate by increasing tariffs.
The group’s financial director said on February 20 that additional customs could cost Mercedes a “small” — or about 1 billion euros.
China – Volvo, a smart-min manufacturer, has nearly one-fifth of its U.S. turnover, opened a factory in 2015.
“It will be turbulent and it will be part of the 2025 challenge,” Volvo CEO Jim Rowan said in early February.
“Of course, we need to wait for how it works, but we are preparing ourselves to see if we need to start researching production relocations, and even need to move around the world,” he said.
British brand Aston Martin explained to AFP that it is relatively protective because it operates in the luxury sector, where buyers are more willing to absorb higher prices.
Stellantis’ case
Stellantis is in a different situation. The results of Stellantis’ merger in 2021 are those of Italian-American Fiat-Chrysler and French PSA, which sells American models primarily in the United States.
It imports only a few Fiat 500, Maseratis or Alfa Romeo people from Europe and sent some pickups in the opposite direction.
However, the group will be affected by the revelation of the Canadian United Nations-Mexico Free Trade Agreement (CUSMA), which will complicate the movement of its parts and vehicles between factories between the three countries.
Strantis chairman John Elkann also expressed support to the U.S. president on Wednesday in defending Kusma, weeks after announcing a massive investment in the U.S.
“We believe that the real opportunity to really promote jobs in the U.S. is to close the loopholes that currently allow about 4 million cars to enter the country without any U.S. content,” he said.
Japan and South Korea are the second and third largest vehicles in the United States, second only to Mexico, with brands such as Toyota and Hyundai.
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