Trump tariffs would harm US consumers, say German carmakers
Donald Trump did not immediately implement the wide range of tariffs he promised, but says they are still an option
21 January 2025 - 15:16
byNick Carey
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In the past, Trump has used the threat of tariffs to push carmakers to move more production to the US. Picture: REUTERS
US President Donald Trump’s tariff plans would mean higher car prices for US consumers and hit global carmakers, Germany's powerful car industry warned on Tuesday, as vehicle stocks fell on the prospect of higher US import duties.
Hildegard Mueller, the president of Germany’s VDA auto association, told an annual media conference that Trump’s threatened tariffs would drive up US inflation.
“Donald Trump promised in his election campaign to reduce inflation,” she said. “In this respect, we are hoping for further discussions on this topic.”
Trump, who took office on Monday, did not immediately implement the wide range of tariffs he had promised, but said they were still an option and indicated that tariffs of 25% on Canada and Mexico could be imposed as early as February 1.
In the past, Trump has used the threat of tariffs to push carmakers to move more production to the US. Global carmakers make cars in Mexico for sale in the US, and the Central American country is an integral part of the supply chain for US vehicle production.
Major suppliers such as Bosch and Continental have been working on ways to move some productionand mitigate the effects, but US tariffs on Mexican vehicle imports would hurt US, European, Japanese and South Korean carmakers and suppliers alike.
In Asia, the continued threat of US tariffs hit shares of Honda, Mazda, Hyundai and Kia, which all produce vehicles in Mexico. In Europe, Volkswagenand Stellantis, which would be particularly vulnerable to tariffs on Mexican production, were down 0.8% and 1.3% respectively.
Volkswagen, the world’s second-largest vehicle maker, said it was “concerned about the harmful economic impact that proposed tariffs by the US administration will have on US consumers and the international automotive industry”.
The company highlighted planned investments exceeding $10bn in the US, split between its Chattanooga plant and a joint venture with Rivian.
Carmakers had been negotiating with Trump’s team ahead of his inauguration, hoping to prevent the imposition of tariffs.
Stellantis chair John Elkann spent four days in Washington meeting Trump and top administration officials, according to a company source. Elkann, who is steering Chrysler and Jeep parent Stellantis while it seeks a new CEO, was among global executives attending celebrations for Trump’s inauguration on Monday.
Volkswagen has also been in close contact with the Trump administration over tariffs, two people familiar with the matter said.
Volkswagen and German rivals Mercedes-Benz and BMW all have plants in Republican states that voted for Trump, and all have emphasised their commitment to US production.
The VDA’s Mueller said this “should be taken into account” in any talks on tariffs.
“We have a lot to offer, many jobs in the US, a functioning production network that also creates growth and prosperity in the US,” she said. “If tariffs are imposed, we have to consider how we can respond to them in concrete terms.”
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Trump tariffs would harm US consumers, say German carmakers
Donald Trump did not immediately implement the wide range of tariffs he promised, but says they are still an option
US President Donald Trump’s tariff plans would mean higher car prices for US consumers and hit global carmakers, Germany's powerful car industry warned on Tuesday, as vehicle stocks fell on the prospect of higher US import duties.
Hildegard Mueller, the president of Germany’s VDA auto association, told an annual media conference that Trump’s threatened tariffs would drive up US inflation.
“Donald Trump promised in his election campaign to reduce inflation,” she said. “In this respect, we are hoping for further discussions on this topic.”
Trump, who took office on Monday, did not immediately implement the wide range of tariffs he had promised, but said they were still an option and indicated that tariffs of 25% on Canada and Mexico could be imposed as early as February 1.
In the past, Trump has used the threat of tariffs to push carmakers to move more production to the US. Global carmakers make cars in Mexico for sale in the US, and the Central American country is an integral part of the supply chain for US vehicle production.
Major suppliers such as Bosch and Continental have been working on ways to move some production and mitigate the effects, but US tariffs on Mexican vehicle imports would hurt US, European, Japanese and South Korean carmakers and suppliers alike.
In Asia, the continued threat of US tariffs hit shares of Honda, Mazda, Hyundai and Kia, which all produce vehicles in Mexico. In Europe, Volkswagen and Stellantis, which would be particularly vulnerable to tariffs on Mexican production, were down 0.8% and 1.3% respectively.
Volkswagen, the world’s second-largest vehicle maker, said it was “concerned about the harmful economic impact that proposed tariffs by the US administration will have on US consumers and the international automotive industry”.
The company highlighted planned investments exceeding $10bn in the US, split between its Chattanooga plant and a joint venture with Rivian.
Carmakers had been negotiating with Trump’s team ahead of his inauguration, hoping to prevent the imposition of tariffs.
Stellantis chair John Elkann spent four days in Washington meeting Trump and top administration officials, according to a company source. Elkann, who is steering Chrysler and Jeep parent Stellantis while it seeks a new CEO, was among global executives attending celebrations for Trump’s inauguration on Monday.
Volkswagen has also been in close contact with the Trump administration over tariffs, two people familiar with the matter said.
Volkswagen and German rivals Mercedes-Benz and BMW all have plants in Republican states that voted for Trump, and all have emphasised their commitment to US production.
The VDA’s Mueller said this “should be taken into account” in any talks on tariffs.
“We have a lot to offer, many jobs in the US, a functioning production network that also creates growth and prosperity in the US,” she said. “If tariffs are imposed, we have to consider how we can respond to them in concrete terms.”
Reuters
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