Global Automakers Brace for Tariff Turbulence

European and American carmakers face potential profit losses due to proposed U.S. import tariffs on Europe, Mexico, and Canada. S&P Global warns that companies like Volvo, Jaguar Land Rover, GM, and Stellantis are particularly exposed, with potential credit downgrades and increased competition pressures ahead.

Carmakers across Europe and America are bracing for a significant financial hit as the United States mulls over imposing import tariffs on vehicles from Europe, Mexico, and Canada. A report by S&P Global highlights that these tariffs could slash up to 17% of the automotive industry's combined annual core profits, raising concerns over potential credit downgrades.

The threat looms larger for premium manufacturers like Volvo and Jaguar Land Rover, primarily based in Europe, as well as car assembly giants General Motors and Stellantis, which operate high-volume production in Mexico and Canada. These companies find themselves particularly vulnerable to the proposed tariffs.

Compounding the challenge, S&P predicts that new CO2 regulations in Europe and fierce competition in China and Europe will further squeeze earnings. If the U.S. follows through with a 20% tariff on EU light vehicle imports and a 25% tariff on those from Mexico and Canada, the financial outlook could worsen for top players such as GM and Stellantis.

(With inputs from agencies.)