Tariff Turmoil: Auto Industry Faces New US Import Levies

Automaker stocks plummeted globally after US President Trump's announcement of a 25% tariff on imported vehicles and parts. Key industry players lost billions in market value. The tariffs challenge the industry's electrification efforts and logistics costs, with companies considering whether to localize production or pass costs onto consumers.

The global automotive industry experienced a significant setback after U.S. President Donald Trump declared a 25% tariff on all vehicles and foreign-made auto parts imported into the country. This announcement on Thursday sent automaker stocks spiraling downwards, with leading companies like Volkswagen, BMW, and Mercedes-Benz seeing a combined loss of 4.5 billion euros in market value.

As the sector grapples with the challenge of adapting to new tariffs, major manufacturers such as Volvo, Audi, and Hyundai are considering shifting some production to the United States. However, there remains uncertainty, as some executives hesitate to make long-term decisions based on potentially short-lived policies. The looming tariffs are expected to increase vehicle costs, contradicting earlier promises to combat consumer price inflation.

New levies will commence from April 3 for cars and May 3 for parts, potentially affecting nearly half of the automobiles sold annually in the U.S., which relies heavily on imports. Despite potential exemptions for Canada and Mexico, analysts forecast significant disruptions in North American vehicle output, with Cox Automotive predicting a daily reduction of 20,000 vehicles, translating to a 30% production hit.

(With inputs from agencies.)