According to Bloomberg Intelligence, these tariffs imposed by Trump on Mexican and Canadian vehicles could reduce European automakers’ earnings by 5.88 billion euros (about $6.2 billion) this year.
On March 4, Bloomberg Industry Research senior industry analyst Michael Dean wrote in a note that the Stellantis group, which owns brands such as Jeep, Ram, Chrysler and Dodge, may import about 417,000 cars to the United States this year from Mexico and Canada. Dean estimates that Stellantis’s €3.44 billion in revenue and Volkswagen’s €1.77 billion in revenue will be at risk if the company does not take any mitigation measures.
“There is very limited room to pass this extra cost to consumers in the case of an average discount of up to $2,000 in the U.S., fierce competition and overcapacity. If the costs brought by the tariff are passed on to consumers (which are unlikely), it will lead to a price increase of $6,000 to $10,000 per new car.”
In addition, major suppliers of parts for automakers in Canada and Mexico are also facing tariff pressure. On March 4, Continental said it would analyze what tariffs mean to its factories before making relevant decisions.
The Canadian government also announced a comprehensive counter-tariff plan for U.S. products after U.S. President Trump confirmed that the United States will begin imposing new tariffs on Canada and Mexico on March 4. In the first phase, Canada will impose a 25% tariff on US products worth about CAD 30 billion (about US$20.6 billion), including orange juice, peanut butter and coffee, and will be implemented at 12:01 midnight on March 4, NY time unless the United States cancels tariffs on Canada. Three weeks later, Canada will impose a second round of the same tariff on US products worth CAD 125 billion, with a product list that will include cars, trucks, steel and aluminum.