Trump's proposed tariffs could lead to a 17% loss in annual profits for carmakers

From Investing.com: 2024-11-29 07:15:40

European and American carmakers face a potential 17% loss in annual core profits if the U.S. imposes import tariffs on Europe, Mexico, and Canada, according to a report by S&P Global. Premium automakers like Volvo and Jaguar Land Rover, along with GM and Stellantis, are most at risk due to higher tariffs.

President-elect Donald Trump’s proposal of a 25% duty on imports from Canada and Mexico could have severe implications for European car makers like Volkswagen and Stellantis, potentially surpassing the impact of direct tariffs on EU goods. Analysts are concerned about the repercussions of such tariffs on the industry.

S&P warns that higher tariffs, coupled with tighter CO2 regulations in Europe from 2025 and increased competition in China and Europe, could lead to credit downgrades for automakers. The risk of downgrades may rise if tariffs exacerbate other challenges facing the industry by 2025.

By 2025, the EU plans to lower the cap on average emissions from new vehicle sales to 94 grams/km from 116 g/km. S&P’s worst-case scenario includes a 20% tariff on U.S. light vehicle imports from the EU and the UK, and a 25% tariff on imports from Mexico and Canada, putting the EBITDA of GM, Stellantis, Volvo, and Jaguar Land Rover at risk. Other automakers face varying degrees of risk.



Read more at Investing.com: Trump’s tariffs could cost carmakers up to 17% of combined core profits, S&P says By Reuters