Volkswagen Fears That Trump’s Tariffs Will Have A Negative Impact

Volkswagen issued a strong warning on Tuesday regarding the serious economic consequences of tariffs proposed by US President Donald Trump on imports from Mexico.

As a major European automaker with a substantial manufacturing presence in Mexico, the company emphasized that these tariffs could have a detrimental impact on both the industry and the economy as a whole.

The comments from the German car giant, which is already struggling with high costs and low-cost Chinese competition at home, reflect heightened uncertainty following Trump’s threat to impose 25 percent tariffs on goods from Mexico.

Although no firm decision has been made, Trump said such tariffs could take effect from February 1.

“The Volkswagen Group is concerned about the detrimental economic impact that the tariffs proposed by the US administration will have on American consumers and the international automotive industry,” a Volkswagen spokesman said in a statement to Reuters.

Volkswagen shares fell 1.2%, along with European rivals that all fell on the possibility of tariffs.

To demonstrate its commitment to U.S. plants, Volkswagen said it is investing more than $10 billion in the country, roughly split between the Chattanooga plant and a joint venture with Rivian.

“We value cooperation and open dialogue. The Volkswagen Group looks forward to continuing its long-standing and constructive partnership with the US administration,” the spokesperson added.

Volkswagen’s Puebla car plant is the largest in Mexico and one of the largest in the Volkswagen Group, producing almost 350,000 cars in 2023, including the Jetta, Tiguan, and Taos—all for export to the US.

Stifel analysts have calculated that about 65% of the cars Volkswagen sells in the United States would no longer be competitive if tariffs were added to imports from Mexico.

• Also See: Volkswagen Global Sales Decline As Chinese Rivalry Heats Up