In the wake of Donald Trump's inauguration on Monday, and of his stated intention to impose tariffs on imported goods coming from many countries – including Canada - several automakers are going public stating they are very concerned.
Volkswagen today warned of the damaging economic impact of the tariffs the President is proposing to impose on imports from Mexico.
Volkswagen operates a major plant in Puebla in Mexico. That plant is the country’s largest, and one of the largest belonging to the Volkswagen Group. It produced almost 350,000 vehicles in 2023, including Jetta cars and Tiguan and Taos SUVs - all destined for export to the U.S.
In the wake of Donald Trump's inauguration on Monday, and of his stated intention to impose tariffs on imported goods coming from many countries – including Canada - several automakers are going public stating they very concerned.
Volkswagen today warned of the damaging economic impact of the tariffs the President is proposing to impose on imports from Mexico.
Volkswagen operates a major plant in Puebla in Mexico. That plant is the country’s largest, and one of the largest belonging to the Volkswagen Group. It produced almost 350,000 vehicles in 2023, including Jetta cars and Tiguan and Taos SUVs - all destined for export to the U.S.
As Reuters reports, the comments from the German giant, already struggling with high costs and cheap Chinese competition on its home turf, reflect major uncertainty following the new president’s threat to impose 25-percent tariffs on goods from Mexico.
Yesterday, alongside a slew of executive orders, the President announced the 25-percent tariffs would come into force for Mexico and Canada on February 1st.
We'll have to wait for official decisions on this, but the concern is real. Here's what VW told Reuters:
“The Volkswagen Group is concerned about the harmful economic impact that proposed tariffs by the U.S. administration will have on American consumers and the international automotive industry. We value collaboration and open dialogue. The Volkswagen Group looks forward to continuing its longstanding and constructive partnership with the U.S. administration.”
Volkswagen shares were down 0.8 percent today, while those of its European rivals also fell due to the prospect of tariffs.
Analysts at Stifel estimated that around 65 percent of the vehicles sold by Volkswagen in the U.S. will no longer be competitive if tariffs are applied to Mexican imports.
Imagine a 25-percent increase in the price of the Jetta, Tiguan and Taos. That would be the end of them.
And it's not as if Volkswagen doesn't have a presence in the U.S. To demonstrate its commitment to American sites, the company pointed out that it is making total investments of over $10 billion in the country, split roughly between its Chattanooga plant and a joint venture with Rivian.
Volkswagen has been in close contact with the Trump administration on the subject of tariffs, according to two people familiar with the matter who spoke with Reuters.
BMW is also keeping a close eye on the matter. Last week, the group's CEO visited South Carolina, where the German automaker owns a plant in Spartanburg. He received an award from the state's Republican governor for his contribution to the economy.
There, you can feel the pride of the authorities with this employer, who has enabled the community to gentrify over the decades thanks to the creation of well-paid jobs.
What's more, the company states in a press release that “BMW assembles more vehicles in the U.S. than we sell in the U.S. and exports more vehicles from the U.S. than we import into the U.S.”
Another story to follow regarding this tariff threat.