The recent imposition of tariffs by President Donald Trump on Canada and Mexico has sent shockwaves through the regional auto industry, leading to volatile trading of stocks. The tariffs have sparked a complex scenario for global automotive players, particularly German automaker BMW, which is set to face significant challenges. The new tariffs exempt vehicles complying with the United States-Mexico-Canada-Agreement (USCMA), but BMW, which imports 10% of its U.S. unit sales from Mexico, has not been granted an exemption under these rules.
Last week marked a critical juncture as new duties on goods from Mexico, Canada, and China came into effect. The White House announced a one-month tariff delay for automakers whose vehicles adhere to the USCMA conditions. These regulations stipulate that if at least 75% of a vehicle's parts are sourced from North America, it can avoid the new tariffs imposed on imports from Canada and Mexico. However, BMW finds itself in a precarious position as it does not meet these requirements.
"Tariffs, on the other hand, hinder free trade, slow down innovation, and set a negative spiral in motion." – BMW Group
The European Union is on high alert as vehicles and machinery—its largest exports to the United States—face potential tariffs. In 2023 alone, the EU had a 102 billion euro trade surplus in machinery and vehicles with the U.S., representing 41% of its exports to America. The looming threat of tariffs on EU-made cars is a significant point of concern, with an impending deadline set for April 2.
"As a global automotive manufacturer, we are monitoring developments in North America very closely and assessing any potential effects on the automotive industry and our company as a result of the tariffs announced for the USA, Canada, Mexico and the European Union." – BMW Group
President Trump's consistent threats to impose tariffs on major U.S. trading partners—including Canada, Mexico, and the EU—have created an atmosphere of uncertainty among automakers. BMW warns that these tariffs will ultimately burden consumers by making products more expensive and less innovative.
"In the end, they are detrimental to customers, making products more expensive and less innovative." – BMW Group
Meanwhile, Stellantis and Volkswagen find themselves in contrasting situations. Shares of Stellantis surged following the announcement of exemptions for carmakers last week. Stellantis supports the President's goal of boosting American car production and job creation.
"We share the President's objective to build more American cars and create lasting American jobs," – Stellantis
Volkswagen has confirmed that its North American assembled VW-brand vehicles comply with USCMA rules of origin and are thus exempted from the 25% tariffs. The company has expressed readiness to collaborate with policymakers to safeguard industry interests.
"Our North American assembled VW-brand vehicles meet the USMCA rules of origin and are exempted from the 25% tariffs," – Volkswagen
"We stand ready to work with policymakers to find solutions that support the U.S. industry while preserving economic opportunities for workers, businesses and consumers alike," – Volkswagen