![\"trump](\"https:\/\/www.globalvillagespace.com\/tech\/wp-content\/uploads\/2025\/05\/tariff-turmoil-how-automakers-are-navigating-a-5-billion-crisis.jpg\" "\\"trump")
<\/a><\/p>\nFor many, the imposition of a 25% US import charge spells crisis. But for some, it’s a major opportunity<\/p>\n
Car makers with exposure to the giant US car market are scrabbling for solutions to mitigate the predicated loss of billions in profits as a result of the sudden and highly punitive tariffs imposed by president Donald Trump<\/a>.<\/p>\n General Motors said it had \u201cpulled out the Covid playbook\u201d in a bid to reduce costs after predicting that\u00a0it will take a $4-5 billion (\u00a33-4bn) hit on profits this year.\u00a0<\/p>\n Meanwhile, the Volkswagen<\/a> Group said it was looking to bring more production the US to offset a situation what analysts have calculated will cost \u20ac2-4bn (\u00a31.7bn-3.4bn) of profit this year.<\/p>\n Aston Martin<\/a> and JLR\u00a0have both paused shipments to the US after stuffing the market with models ahead of the tariffs starting.<\/p>\n Mercedes-Benz<\/a> has calculated the tariffs will wipe off three percentage points of margin, which,\u00a0based on 2024 figures, could be as much as \u20ac5<\/span>bn (\u00a34.3bn).<\/span><\/p>\n Meanwhile, Stellantis said it was taking actions \u201cto protect the company in the short term\u201d, including temporary shutdowns and layoffs.<\/p>\n The raft of tariffs include a 25%\u00a0duty on light vehicles vehicles coming into the US from all countries globally from 3 April.\u00a0<\/p>\n A similar duty will be applied from 3 May\u00a0to foreign parts imported to fit to cars built in the US.<\/p>\n Some relief will be given to those that produce cars in the US to mitigate the pain of \u2018stacked\u2019 tariffs, for example steel and aluminium tariffs hitting the production of parts made of those metals.<\/p>\n Vehicle exports from Canada and Mexico will be tariff-exempt but only if they comply with the requirement to include a certain percentage of regional parts \u2013\u00a0a clause that German\u00a0companies in particular are struggling to comply with.\u00a0<\/p>\n Meanwhile, China has hit US car imports with a retaliatory 140% tariff, pretty much ending a lucrative export business for high-margin vehicles from the likes of\u00a0BMW<\/a>,\u00a0Ford<\/a>\u00a0and\u00a0Mercedes.<\/span><\/p>\n Ford said it had stopped shipping its F-150 Lightning<\/a> to the country while Mercedes CFO Harald Wilhelm told investors on the company\u2019s recent earning call that the tariffs hitting the US-built GLE<\/a> and GLS<\/a> heading to China\u00a0were \u201cprohibitive\u201d.<\/p>\n Trump\u2019s tearing hurry to rebuild an incredibly complex and globally interlinked business in order to force more manufacturing to locate in the US has been described as a \u201cmid-air disassembly\u201d by one commentator.<\/p>\n Meanwhile, car makers are throwing out parachutes to avoid the worst of the damage.<\/p>\n On the recent round of earnings calls, analysts pressured car makers on possible ways they could mitigate the tariff impact, but again and again, CEOs and CFOs had to point out how much of a long-term process it is to rebuild production and supply chains.\u00a0<\/p>\n Volkswagen said it was \u201cevaluating\u201d options to make more models at its Chattanooga plant in Tennessee, but CFO Arno Antlitz warned analysts on the company\u2019s first-quarter earnings that it was \u201ctoo early to say\u201d whether such a solution was possible.\u00a0<\/p>\n Of\u00a0the 730,000 vehicles that the Volkswagen Group\u00a0sold in the US in 2024, only around\u00a0 200,000 of them were produced in the US, with about 290,000 coming from Mexico and about 240,000 coming\u00a0from Europe.\u00a0<\/p>\n Of the Group\u00a0cars produced in Mexico, only Volkswagen models from the vast Puebla plant are compliant with the United States-Mexico-Canada Agreement (USMCA<\/span>), which\u00a0sets a 75% minimum regional value content before waiving the tariffs. Audi Q5s<\/a>\u00a0made in the Jos\u00e9 Chiapa plant aren\u2019t compliant, mainly because their engines are shipped from Germany.<\/p>\n Like many car companies, Volkswagen has suspended its guidance (estimated financial performance) for 2025, saying it couldn\u2019t properly assess the damage.\u00a0<\/p>\n Mercedes is another with a substantial production facility in the US, situated in Tuscaloosa, Alabama, where it makes big SUVs. But despite local production with a strong export focus (both key goals under the Trump regime), it will be hit hard.\u00a0<\/p>\n Along with the damage to exports to China, Mercedes will be hit by tariffs on engines\u00a0sent to the US for SUV production to Europe.<\/p>\n The same problem will also affect the US production of BMW, which at the time of writing hadn\u2019t updated its financial position after the first quarter.<\/p>\n \u201cWe have built up our internal-combustion-engine industrial structures in Europe over more than 100 years,\u201d CEO Ola K\u00e4llenius told investors. \u201cTo move them quickly to two other economic regions is probably prohibitive from a capital spending point of view.\u201d<\/p>\n Aston Martin said it would have to raise prices to cover at least part of the tariff increase, but others warned that doing so risked ceded market share to those not so impacted.<\/p>\n \u201cYou can\u2019t just push a button and say\u00a0\u2018okay, I have a tariff, let’s just raise the price and everything stays the same\u2019. That’s not how market economy works,\u201d K\u00e4<\/span>llenius<\/span>\u00a0said.<\/p>\n The bigger hit on car makers either building outside the US or with higher proportions of imported parts help those car makers more localised in the US.<\/p>\n