Volkswagen warned of the “detrimental economic impact” of the tariffs that Donald Trump proposes on imports from Mexico, where Europe’s main car manufacturer has a major factory.
The comments from the German auto giant, which already faces high costs and cheap competition from China in its country, reflect great uncertainty following the US president’s threat to possibly impose 25% tariffs on products from Mexico.
Although no firm decision has been made, Trump said such tariffs could take effect as early as February 1.
“The Volkswagen Group is concerned about the damaging economic impact that the US administration’s proposed tariffs will have on American consumers and the international auto industry,” a spokesperson said in a statement emailed to Reuters.
Read: Trump will have to ‘consider a little more’ imposing new tariffs on Mexico: Alicia Bárcena
“We value collaboration and open dialogue. “The Volkswagen Group looks forward to continuing its long-standing and constructive collaboration with the US administration,” he added.
Volkswagen shares fell 0.8% as European rivals also fell on the prospect of tariffs.
The Volkswagen factory in Puebla is the largest in Mexico and one of the largest in the group. It produced almost 350,000 cars in 2023, including Jetta, Tiguan and Taos, all for export to the US.
Analysts from the financial group Stifel have estimated that around 65% of the cars Volkswagen sells in the US would no longer be competitive if tariffs were added to Mexican imports.
In an effort to demonstrate its commitment to U.S. plants, Volkswagen said it was making total investments of more than $10 billion in that country, split between its Chattanooga plant and a joint venture with Rivian.
Read: Samsung and LG could move part of the production of household appliances from Mexico to the US due to tariffs
“In the conversation with the new American president it was also clear that economic strength is the best response to the most recent challenges,” Hildegard Mueller, who heads the German automotive lobby group VDA, said Tuesday.
Volkswagen has been in close contact with the Trump administration about the tariffs, according to two people familiar with the matter.
Last week, BMW CEO Oliver Zipse was in South Carolina, where the German automaker has a plant, and received an award from the state’s Republican governor for his contribution to the economy.
“BMW assembles more vehicles in the United States than it sells there and exports more vehicles from the United States than it imports into the United States,” he said, adding that in 2023 it sold more than 396,000 vehicles there.
With information from Reuters
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