The 25-percent tariffs imposed by the U.S. administration on imported vehicles are already being felt. According to a study by the firm Inovev, the total of European vehicles exported to the U.S. could fall by 200,000 units by the end of 2025.
The firm, specialized in vehicle-related data, adds the caveat that the total impact of the tariffs will depend on how long they are in effect. But if they remain in place until the end of the year, at the announced rate of 25 percent, 200,000 of the estimated 900,000 exports from the European Union and the UK to the U.S. would not make the trip across the pond.
A huge drop
In percentage terms, such a decrease means 22 percent fewer vehicles crossing the ocean, which is enormous.
As Automotive News points out, the United States is Europe's largest vehicle export market, ahead of Turkey and China. The number of vehicles exported over the past 10 years has fluctuated between a peak of 975,000 units in 2018, and 700,000 units at its lowest during the semiconductor crisis after Covid-19, according to Inovev.
For European automakers, this could represent billions in financial losses, resulting from a contraction in sales revenue.
According to a report by investment bank Jefferies, the tariffs could reduce Stellantis' profits by 75 percent this year, or about 7 billion euros (nearly 7.7 billion USD).
The forecasts are of course based on the expectation that American consumers will largely change their habits, or even postpone the purchase of a vehicle due to anticipated higher prices. The firm also predicts several manufacturers will hold back their exports while waiting for a solution to this impasse.
Sure enough, already, Audi has decided to hold back vehicles that arrived in American ports after April 3rd. Jaguar Land Rover has suspended its vehicle exports to the U.S.
We’re also seeing different strategies taking shape among the various manufacturers. Mercedes-Benz says it will absorb the cost of the tariffs and not increase the price of its 2025 models for the time being. Other carmakers plan to spread the costs of the tariffs across their entire model range. Some may transfer part of their production to the U.S. to avoid or reduce the effects of the tariffs.
German brands Volkswagen, Mercedes-Benz and BMW are the largest exporters of vehicles to the United States. Their actions will be closely watched in the coming weeks.
