The latest tariffs imposed by former U.S. President Donald Trump are causing uncertainty in the auto industry.
The 25% tariff on car imports from Mexico and Canada is set to disrupt supply chains, potentially raising vehicle prices for American consumers.
However, some manufacturers may be able to sidestep these costs based on trade agreement regulations.
Volkswagen Likely to Avoid Tariffs
According to Digi24, Volkswagen announced that its vehicles produced in North America comply with the United States-Mexico-Canada Agreement (USMCA) rules.
This compliance likely exempts the company from the tariffs, giving it a competitive edge over rivals facing additional costs.
A spokesperson for Volkswagen stated that all vehicles assembled in North America meet USMCA's rules of origin, which is a key requirement for avoiding the new import duties.
BMW and Mazda Among the Most Affected
BMW, however, is in a more difficult position.
The German automaker acknowledged that its U.S. and Mexican manufacturing operations do not fully comply with USMCA requirements.
As a result, the company expects to face the 25% tariff on certain imports. With approximately 10% of its U.S. sales coming from vehicles manufactured in Mexico, BMW warned that the increased costs could lead to higher prices for consumers.
“These tariffs ultimately harm customers by making products more expensive and less innovative,” BMW stated in response to the policy.
Mazda, another automaker affected by the tariff, is closely monitoring the situation.
While its Mazda3 and CX-30 models, produced in Mexico, are currently exempt from tariffs for the next 30 days, the company is awaiting further clarification from the Trump administration on whether additional fees will apply in the future.
Industry Reactions and Uncertainty
The tariffs have sparked strong reactions from automakers, particularly in Detroit, where U.S. car manufacturers have lobbied for temporary exemptions.
While the Trump administration granted a one-month delay in enforcement, concerns remain about the long-term effects on the industry.
German manufacturers, particularly Volkswagen, appear to be the most vulnerable due to their heavy reliance on Mexican production.
Audi, which builds the Q5 SUV in Mexico, has yet to confirm whether its operations meet USMCA standards. Meanwhile, Mercedes-Benz has refrained from commenting on how the tariffs might impact its business.
As the industry awaits further developments, automakers are exploring ways to mitigate potential price hikes and supply chain disruptions.
The full impact of Trump’s tariff policy will likely become clearer in the coming months, as companies assess their compliance with USMCA regulations and seek potential workarounds.
