Automakers Volkswagen and Stellantis have confirmed that their vehicles made in North America will be exempt from U.S. President Donald Trump’s newly rolled out 25% tariffs, while BMW says it will face levies, as European car manufacturers grapple with new trade rules.
The newly returned White House leader has long been threatening to slap tariffs on major U.S. trading partners, including Canada, Mexico and the EU. Last week, new duties on goods from Mexico, Canada and China came into effect.
The threat of import tariffs has raised alarm bells in Europe, as vehicles and machinery are the European Union’s biggest exports to the United States. In 2023, the EU had a 102 billion euro ($110.6 billion) trade surplus in machinery and vehicles with the U.S., with the category accounting for 41% of its exports to America.
However, some of the region’s automaking giants may be able to — at least temporarily — skirt around the new duties. Last week, the White House granted a one-month tariff delay to automakers whose vehicles comply with the United States-Mexico-Canada Agreement, or USMCA — a trade deal between the three countries. Under its terms, if at least 75% of a vehicle’s parts originate from North America, it can be exempted from new tariffs imposed on imports from Canada and Mexico.
“Our North American assembled VW-brand vehicles meet the USMCA rules of origin and are exempted from the 25% tariffs,” a Volkswagen spokesperson said in an emailed statement.
“As a global automotive manufacturer, we are monitoring developments in North America very closely and assessing any potential effects on the automotive industry and our company as a result of the tariffs announced for the USA, Canada, Mexico and the European Union.”
Aside from its flagship brand, Volkswagen owns various major vehicle brands including Skoda, Audi and Bentley.
“We stand ready to work with policymakers to find solutions that support the U.S. industry while preserving economic opportunities for workers, businesses and consumers alike,” the auto giant told CNBC.
Meanwhile, Stellantis — known for its Jeep and Dodge vehicles — thanked Trump for granting the USMCA exemption in a statement on Friday and pledged to grow its U.S. operations. The carmaker was one of the major companies given a one-month exemption from the levies, ahead of so-called reciprocal tariffs coming into effect on April 2.
“We share the President’s objective to build more American cars and create lasting American jobs,” the firm said at the time. “We look forward to working with him and his team.”
Shares of Stellantis, which has multiple plants in Mexico, popped after Trump announced the exemptions for carmakers last week. The stock was up more than 2% on Monday afternoon in London.