Key takeaways:
- BMW is assessing the impact of Trump’s 25% tariffs on imported vehicles and may add shifts at its Spartanburg, SC plant to boost US production.
- Several automakers, including Volkswagen and Mercedes-Benz, are suspending exports of vehicles from Mexico to the US due to the new tariffs.
- The tariffs could disrupt global automotive supply chains and investment strategies as carmakers reevaluate production plans.
Introduction
- Automakers are quickly revising their production and export strategies after the Trump administration enforced 25% tariffs on imported vehicles and auto parts, effective April 3rd.
- BMW, one of the largest exporters of vehicles to the US, announced it is assessing the potential impact on its supply chains and may add shifts at its Spartanburg, South Carolina plant to boost US production.
- Volkswagen Group, including its Audi division, has suspended vehicle shipments from Mexico to the US, saying the tariffs will have “negative consequences” for the industry’s supply chains and customers.
Disruption to Regional Supply Chains
The new 25% tariffs apply to all vehicles imported into the US from other countries, including those built at Mexican plants by US, European, and Asian automakers. According to data from Mexico’s statistics agency, around 80% of vehicles produced in Mexico are exported to the United States 1.
In addition to BMW and Volkswagen, other major automakers like Mercedes-Benz and Nissan’s Infiniti brand have halted exports of certain models from Mexico while they assess compliance with the new tariff rules 2. Carmakers must ensure at least 75% of a vehicle’s components are manufactured in North America to qualify for tariff-free trade under the USMCA agreement.
“We share the assessment of most experts that US tariffs and any counter-tariffs will have negative consequences for growth and prosperity in the US and other economic areas,” said Volkswagen. “The entire automotive industry, global supply chains and companies as well as customers will have to bear the negative consequences.”
Evaluating Long-Term Supply Chain Strategies
Beyond the immediate disruptions, analysts warn the tariffs could force automakers to fundamentally restructure their integrated North American supply chains and production footprints. Companies may need to localize more parts sourcing, shift manufacturing to the US, or revise pricing strategies to absorb higher costs.
“The new era that we’re moving into very much puts politics at the centre of the global EV supply chain,” said Andrew Miller, Chief Operating Officer at Benchmark Mineral Intelligence, referring to the critical minerals needed for electric vehicle batteries 3.
While some major US brands like GM and Ford are expected to receive temporary exemptions aligned with USMCA local content rules 4, industry experts say sustained tariffs and potential retaliation from trade partners could lead to higher costs that get passed to consumers.
Conclusion
President Trump’s new 25% tariffs on imported autos have set off a scramble among global automakers to mitigate disruptions and reevaluate their long-term supply chain and manufacturing strategies.
While the full implications remain to be seen, the tariffs seem poised to increase costs and accelerate a shift toward more localized production in the critical North American auto market. The developments underscore the operational and financial risks companies face in an increasingly volatile global trade environment.
References
1 Williams, Marcus (April 8, 2025). “VW Group suspends vehicle shipments from Mexico to US”. Automotive Logistics. Retrieved April 10, 2025.
2 Kelly, Megan (April 8, 2025). “JLR pauses US shipments in response to Trump tariffs”. Automotive Logistics. Retrieved April 10, 2025.
3 Benchmark Mineral Intelligence (October 2024). “China introduces new export rules for critical minerals – lithium, cobalt, graphite”. Benchmark Mineral Intelligence. Retrieved April 10, 2025.
4 Williams, Marcus (March 28, 2025). “Trump’s tariffs delayed for USMCA-compliant carmakers”. Automotive Logistics. Retrieved April 10, 2025.
