Volkswagen ID.7 electric cars are seen at the Volkswagen (VW) electric fleet lead plant in Emden, Germany, Feb. 18, 2025.
Carmen Jaspersen | Reuters
Automakers Volkswagen and Stellantis have confirmed that their vehicles made in North America will be exempt from U.S. President Donald Trump’s newly rolled out 25% tariffs, while BMW says it will face levies, as European car manufacturers grapple with new trade rules.
The newly returned White House leader has long been threatening to slap tariffs on major U.S. trading partners, including Canada, Mexico and the EU. Last week, new duties on goods from Mexico, Canada and China came into effect.
The threat of import tariffs has raised alarm bells in Europe, as vehicles and machinery are the EU’s biggest exports to the United States. In 2023, the EU had a 102 billion euro ($110.6 billion) trade surplus in machinery and vehicles with the U.S., with the category accounting for 41% of its exports to America.
However, some of the region’s automaking giants may be able to — at least temporarily — skirt around the new duties. Last week, the White House granted a one-month tariff delay to automakers whose vehicles comply with the United States-Mexico-Canada-Agreement (USCMA) — a trade deal between the three countries. Under its terms, if at least 75% of a vehicle’s parts originate from North America, it can be exempted from new tariffs imposed on imports from Canada and Mexico.
“Our North American assembled VW-brand vehicles meet the USMCA rules of origin and are exempted from the 25% tariffs,” a Volkswagen spokesperson said in an emailed statement.
“As a global automotive manufacturer, we are monitoring developments in North America very closely and assessing any potential effects on the automotive industry and our company as a result of the tariffs announced for the USA, Canada, Mexico and the European Union.”
Aside from its flagship brand, Volkswagen owns various major vehicle brands including Skoda, Audi and Bentley.
“We stand ready to work with policymakers to find solutions that support the U.S. industry while preserving economic opportunities for workers, businesses and consumers alike,” the auto giant told CNBC.
Meanwhile, Stellantis — known for its Jeep and Dodge vehicles — thanked Trump for granting the USMCA exemption in a statement on Friday and pledged to grow its U.S. operations. The carmaker was one of the major companies given a one-month exemption from the levies, ahead of so-called reciprocal tariffs coming into effect on April 2.
“We share the President’s objective to build more American cars and create lasting American jobs,” the firm said at the time. “We look forward to working with him and his team.”
Shares of Stellantis, which has multiple plants in Mexico, popped after Trump announced the exemptions for carmakers last week. The stock was up more than 2% on Monday afternoon in London.
‘Volatile and complex’ situation
On the other hand, German autos giant BMW said that, if the USCMA regulation remains, it will be subject to levies.
“The current situation regarding the introduction of import tariffs in North America is very volatile and complex,” BMW said in an emailed statement. “The linkage of import tariff to compliance with USCMA rules is the most recent announcement. If this regulation remained in effect, the BMW Group would be one of the affected companies.”
“Our position remains unchanged: Free trade, which has always been a guiding principle for the BMW Group, is of immense importance worldwide,” the company added. “It is one of the most crucial drivers of growth and progress. Tariffs, on the other hand, hinder free trade, slow down innovation, and set a negative spiral in motion. In the end, they are detrimental to customers, making products more expensive and less innovative.”
In a note to clients on Friday, UBS analysts estimated that 10% of U.S. unit sales for BMW were imported from Mexico at a fairly low price tag, largely for the company’s 2 and 3 series models.
“It is worth highlighting that BMW’s U.S. imports from Mexico were already subject to a tariff before,” they said. “The incremental tariff should, all else equal, result in an EBIT impact of ~€400m (before price increases), relatively small in a group context (4%). The bigger potential threat for BMW and the other German OEMs is the potential tariff on EU-made cars, which is facing a deadline on 2 April.”
Trump’s rolls-outs and reversals of tariffs aimed at Canada and Mexico — where many global carmakers have manufacturing plants — has sparked volatile trade of regional autos stocks. Last month, after the president announced a 30-day delay to the levies, global markets saw a major sell-off of autos shares, with valuations falling sharply.