(Alliance News) - U.S. President Donald Trump's announcement that he will introduce 25 percent tariffs on vehicle imports from Mexico and Canada starting Feb. 1 is creating great concern in the automotive sector, which is already under pressure from global competition and strict European regulations on CO2 emissions introduced Jan. 1.
As Il Sole 24 Ore writes Wednesday, S&P Global Ratings predicts that the new tariffs could reduce the Ebitda of affected automakers by up to 17 percent in the worst-case scenario.
Stellantis NV, with 40 percent of vehicles sold in the U.S. made in Mexico and Canada and a heavy reliance on the North American market for nearly half of its profits, is among the most exposed groups. John Elkann, the group's chairman, met with Trump in Washington, stressing his intention to work together to strengthen the U.S. manufacturing sector. However, the impact of tariffs poses a significant challenge.
Volkswagen AG, the European automotive leader, called the duties a detriment to consumers and the global industry. The German automaker, which produces 350,000 vehicles a year in Puebla, Mexico, has invested more than USD10.00 billion in the U.S., including Chattanooga and a joint venture with Rivian for electric vehicles.
BMW, according to CEO Oliver Zipse, would also be affected, despite producing more vehicles in the U.S. than it sells, exporting globally from South Carolina.
Meanwhile, German Chancellor Olaf Scholz announced in Davos a European electric car subsidy plan aimed at reversing declining demand for battery-powered vehicles in 2024.
Major component makers, such as Bosch and Continental AG, are reorganizing production to mitigate the impact, but duties also threaten U.S. players: General Motors Co could lose up to 25 percent of Ebitda.
Duties threaten to increase inflation in the U.S. and costs for consumers, trade associations point out.
By Antonio Di Giorgio, Alliance News reporter
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