The American automotive landscape could be fundamentally reshaped under new US president Donald Trump, as he promises to suppress the growth of EVs and green energy in favour of fossil fuels and hike taxes on imported vehicles and parts.
Both shifts will affect European car makers, too. Those exporting from the EU and the UK are bracing themselves for higher barriers to entry into a key market, potentially reducing their sales and income.
Meanwhile, the promise to junk incentives for EVs and their assembly and supply chains will, if comprehensive, prompt a fundamental rethink to production planning and investment in the US.
Following Trump’s inauguration on 20 January, the EU became the target of the his seemingly bottomless ire towards countries selling into US. “The European Union is very, very bad to us, so they are going to be in for tariffs,” he told reporters, without elaborating.
Tariffs have long been a key plank of Trump’s plan to boost US manufacturing and protect jobs, even as the move threatens to increase inflation and overheat the economy.
Trump didn’t include tariffs in his initial blizzard of executive orders but said that a planned 25% tariff on Mexican and Canadian imports would be imposed from 1 February.
Mexican tariffs in particular would hit car makers hard, with around a fifth of vehicles sold in the US coming from across the southern border.
Many firms use Mexico to build cheaper cars for export, including Honda, Kia, Mazda, Nissan, Stellantis, Toyota, Volkswagen and the US's own Ford and General Motors. Audi builds the Q5 in Mexico for global sales, BMW the 3 Series and models.
Mexico and Canada are also key manufacturing locations for automotive suppliers, supplying around 16% of the parts used in the production of the circa 10 million vehicles built in the US every year, according to the bank Bernstein.
It's not yet known what the tariff on vehicles from the EU will be, but the consultancy S&P Global Mobility is working on the assumption of an additional 10% on top of the existing 2.5%.
Vans, pick-up trucks and lorries already attract a 25% import duty – called the ‘chicken tax’ in reference to a previous trade spat with Europe.
The UK's flourishing premium car sector – including Bentley, JLR and Rolls-Royce – would be the worst hit, accounting for the majority of the 73,571 cars the UK exported in 2023.
The US was the UK's second largest export market after the EU, according to figures from the Society of Motor Manufacturers and Traders.
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