The trade war declared by Donald Trump has turned the international automotive landscape upside down. Since the new 25% tariffs on cars imported into the United States came into effect, the sector's leading brands are facing one of the biggest challenges in recent years. The consequences have not been long in coming, and the effects are already being felt in the balance sheets and strategies of the most globalized companies.
This tariff increase primarily affects vehicles manufactured outside the U.S., including many models of European and Asian brands.Although some brands have diversified their production globally, many of their key plants are located in countries such as Mexico, Canada, China, and several EU member states. This makes them particularly vulnerable in a market as important as the United States.
Who is most affected by Trump's measures?
European brands are the most affected by this new trade barrier.German manufacturers, in particular, appear to be in the crosshairs. BMW, for example, although it has a large plant in Spartanburg, South Carolina, from which it exports more than 220.000 vehicles, also produces key models in Mexico. This dual nature means that a significant portion of its production is penalized by the new tariffs.
Volkswagen is not far behindIts plant in Puebla, Mexico, is one of the largest outside of Germany and supplies a large portion of the North American market. Furthermore, Audi, a Volkswagen Group brand, produces the Q5 in Mexico, with a significant portion destined for the U.S. This puts the German consortium in a difficult position, having to rethink its logistics or assume additional costs. To better understand how these changes affect the industry, you can read more about Audi's QXNUMX. Trump's new tariffs.
Mercedes-Benz is also at the center of the stormAlthough it manufactures models in Alabama, much of its production remains located in Europe, and that means it is exposed to 25% tariffs on vehicles crossing the Atlantic. Porsche and super-luxury brands like Aston Martin and Ferrari, which do not have production facilities on US soil, are even more at risk. Some have already announced price increases for their models to cushion the impact of the tariffs.
The case of Japanese and Korean brands This is equally worrying. Asian manufacturers are also not immune to the White House's new trade order. Toyota, which operates factories in Mexico, also ships a good portion of its production to the U.S. from that country. Mazda and Subaru, with a high percentage of their sales concentrated in the U.S. market (more than 30% in some cases), are also directly affected by the tariffs. A more in-depth analysis of this topic can be found in the article on Trump's threats to the European sector.
American manufacturers are also suffering…
Although Donald Trump has presented tariffs as a measure to protect domestic industry, some American brands are not coming off well.General Motors has several production facilities outside the country, especially in Mexico and Canada. This means that part of its product line is also subject to this tax increase.
Ford is in a similar situationAlthough its US production remains dominant, the brand has been promoting efficiency through a global network of plants for years. This is now forcing it to reconsider its supply chain if it wants to remain price competitive. To learn more about how these decisions are affecting the market, we recommend the article on Honda and its response to tariffs.
Stellantis, which groups together brands such as Chrysler, Jeep and RAM, is also among the most affected.Its dependence on the U.S. market (approximately 46% of its sales), combined with a strong presence in Mexican and Canadian factories, places it in a position of extreme vulnerability to the new tariffs.
Who is saved from the blow?
Tesla emerges as the big winner of this reconfiguration of the automotive trade.Since almost all of its production is located in the United States, it is not subject to tariffs, allowing it to maintain stable prices and gain competitiveness against its foreign rivals. The fact that it is a 100% electric and local brand clearly plays in its favor, making it an exception within the sector.
Renault is another manufacturer that is spared from this impact, although for a different reason: it does not operate in the United States.The French firm has never had a significant presence on the other side of the Atlantic, and therefore the new tariffs do not directly affect its accounts.
Repercussions on European industry
The European automotive industry is on alert. Plants located in Germany, Spain, the Czech Republic, and Italy could experience a drop in their workload if exports to the U.S. decline. Some countries, such as Spain, have mobilized financial resources to cushion the blow. The Spanish government, for example, has announced a plan of more than €14.000 billion to support companies affected by the new U.S. tariff policy. For more information on the impact of tariffs, review the analysis of the reconsideration of tariffs in the automobile sector.
The European Commission has also reacted firmlyUrsula von der Leyen has warned of possible reciprocal measures if the situation is not negotiated. "Tariffs are harmful to both consumers and businesses," she declared. These statements from Brussels demonstrate that we are witnessing a new phase in transatlantic trade relations.
Tariffs beyond complete cars
The impact of the new rates is not limited to full vehicles.Automotive parts are also included in this trade offensive, although it is scheduled to come into effect in May. This poses a new risk to dozens of suppliers operating both within and outside Europe and supplying major brands with electronic, bodywork, and propulsion system components.
Spanish companies specializing in charging stations and technology for electric vehicles could also be affected., especially if the production of electric models falls in Europe as a result of this trade embargo. Countries like Germany are key in this value chain, and any stoppage could have knock-on effects for the rest of the continental industry. If you'd like to learn more about how manufacturers are reacting to this crisis, we suggest reading about British industry and tariffs arising from Brexit.
Financial markets and outlook
Markets have reacted with strong volatility to Trump's announcement.Stock markets have seen significant declines, and several automotive companies have lowered their revenue expectations for the coming quarters. Furthermore, rising operating costs are forcing many companies to rethink their pricing policies, which could negatively impact demand.
Meanwhile, the American consumer could be the first to notice the changes.With a reduced supply of imported vehicles and price increases for models that do reach dealerships, new cars in the U.S. are expected to become significantly more expensive. Some analyses estimate that the most affected models could increase in price by up to $12.000, depending on the manufacturer and country of origin.
The tariff war in the automotive sector is here to stay, at least during this term.Brands, governments, and international organizations are already working against the clock to redefine strategies, establish alliances, and redirect investments. The decisions made in recent months could determine the fate of the automotive industry for the next decade…
Images | EFE, BMW, Ford, Renault, and Tesla
