The car tariffs imposed by Trump are shaking the entire sector, with European manufacturers recording heavy stock market losses.
That the return of Donald Trump to the White House would not bode well for the car market, nor for its already complex ecological transition, is a topic we had already discussed here some time ago. The first effects, negative ones of course, are now beginning to show. We are talking about Trump's latest move, which has literally shaken global markets: the imposition of tariffs of 25 per cent on goods from Mexico and Canada, and 10 per cent on Chinese products — announced on Saturday and in force from Tuesday 4 February — has triggered an earthquake on world stock markets, hitting the automotive sector in particular. On the other hand, as you may recall, last 4 October it was the turn of the European Union member states, which had in turn confirmed their approval of customs duties on imports of Chinese electric vehicles.
Before returning to current events, do you remember the stated objective of the European Union's tariffs? To defend the European automotive industry (in Trump's case, obviously the American one, covering cars but also many other goods) from practices deemed unfair, re-establishing — at least in theory — a level playing field with Chinese manufacturers, accused of benefiting from massive public subsidies. In short, first the problem was China, now it's Canada and Mexico, and soon it will be Europe's turn. But who will pay the consequences? We are already seeing it. Consumers, investors. In other words, us. Protectionism, isolation, barriers — as we have repeatedly stressed here — have never produced positive effects. And tariffs on cars, electric or otherwise, risk turning into a spectacular own goal, slowing down the ecological transition of the car industry.
Let us return to the (catastrophic) effects of Trump's announcements. Analysts fear that the tariffs on Mexico could prove more damaging for European carmakers and their suppliers than any direct tariff on EU goods. Indeed, as Reuters has reconstructed in detail, the market reaction to the tariff announcement was swift, with shares in the major European manufacturers posting heavy losses: Stellantis -6.8 per cent, Volkswagen -5.6, Volvo -6.5 per cent. German premium brands also suffered, with Mercedes-Benz, BMW and Porsche losing between 3.6 and 4.3 per cent.
And it doesn't end there. According to analysts at investment bank Stifel, the impact of the tariffs could be even greater for certain European manufacturers. For Volkswagen, it is estimated that around 8 billion euros in revenue will be affected by Trump's new tariffs, while for Stellantis the figure rises to 16 billion. In terms of operating income for 2025, this would translate into a 12 per cent reduction for Volkswagen and a 40 per cent reduction for Stellantis. Things are no better in Asia, where shares in Japanese manufacturers Toyota and Nissan, as reported by CNBC, fell by more than 5 per cent, Honda crashed by 7.2 per cent, Mazda by over 7.5 per cent and Kia by nearly 6 per cent.
The American president justified the tariffs on Mexico and Canada — implicitly including those on cars without explicitly naming them — by raising issues such as "the threat of illegal immigration and the deadly drugs killing our citizens". In reality, Trump had already expressed strong scepticism about electric vehicles during the election campaign, promising to "drill everywhere", alluding to greater exploitation of American oil reserves.
Among Trump's intentions is also the cancellation of emissions standards and federal credits supporting electric vehicles. In short, it was all foreseeable, one might say: on one hand the battle against environmental policies, then protectionism — first only against Chinese electric vehicles, now against any car not built in the United States. And yet, among Trump's advisers there is a certain Elon Musk, who at the moment, however, seems not to be thinking too much about his Tesla and the benefits of the electric car.
One only needs to look at the stock market reactions to understand that the concerns of the European automotive sector are not limited to the impact of tariffs on Mexico and Canada. Trump has in effect already signalled it: the European Union could "very soon" be the next target of further tariffs, on cars and other goods. Threats to which the EU has already announced it will respond proportionally to any American measures. A doubt we have raised here on more than one occasion: are we certain that defending the borders of the automotive industry — whether American, European or Chinese — will not end up being a spectacular own goal, slowing down the ecological transition of the car industry, stifling innovation and triggering a negative spiral?
"If you don't make your product in America, which is your prerogative, then very simply, you will have to pay a tariff," Trump explained via video link at the recent World Economic Forum in Davos — a barely veiled threat to those who do not manufacture their products in America. Comments from carmakers have been coming thick and fast in the past few hours. We quote those of two German brands that risk being directly affected by the tariffs Trump wants to introduce — brands that, like Volvo and Stellantis, would be exposed to the greatest risks according to Moody's, owing to their strong sales presence in the United States.
European brands such as Volkswagen — which argues that "open markets and stable trade relations" are instead what is needed — and Stellantis have many commercial agreements in place with Mexican factories, potentially facing higher cost increases on their production lines. Those standing to benefit from Trump's policies against electric vehicles could be the major American carmakers — General Motors, Ford, and the former Chrysler brands now owned by Stellantis — which could initially gain from greater support for the sale of internal combustion engine models, more profitable but also far more polluting, with a heavy knock-on effect, however, on the slowdown of transport decarbonisation in the United States. In short, the risk of a global trade war remains high, with potential chain-reaction repercussions across the entire automotive industry.