Trump's tariffs on European cars: Here's who will lose the most

February is just around the corner, and with it comes the potential tariffs that US President Donald Trump wants to impose on cars exported to the US from Mexico, Canada and Europe. A report by Moody's and rival ratings agency S&P predicts that cars exported from Europe to the US could face additional tariffs of 10%, up from 2.5%.

According to industry association ACEA and other experts, the US is the main destination for European car exports, worth €40.3bn in 2023 (+12% year-on-year), while car imports from the US to the EU are worth around $9bn. An increase in tariffs to the expected levels would 'significantly reduce European carmakers' profits', Moody's senior analyst Ruosha Li wrote in a note.

At greatest risk would be Stellantis, the Volkswagen Group, and Volvo.

How much profits would be reduced

According to Moody's, if Trump confirms the 10% tariffs, Stellantis' profits would be reduced by 'well over 15%', because 40% of its vehicles sold in the US come from Canada and Mexico.

The Volkswagen Group's profits, on the other hand, could be reduced by between 5% and 10% if there were a 10% tariff on imports from Europe and 15% from Mexico. Specifically, most Audi models sold in the US are imported from Europe, but the Q5, one of the best-selling Audis in North America, is assembled in Mexico. All Porsches destined for the US are built in Europe, while Volkswagen's Puebla plant in Mexico produces around 350,000 cars a year, including the Jetta, Tiguan and Taos, which are mainly exported to the US.

Volvo, again according to the same report, could suffer a 15% drop in profits in the event of a 10% tariff on European car imports. In fact, apart from the EX90 and S60, which are manufactured in South Carolina, the Swedish company makes its cars for the US in Europe.

BMW and Mercedes would lose less

In this scenario, the European manufacturers that would be least affected by a 10% European tariff would be BMW and Mercedes-Benz, as they have large factories in the US that build mainly SUVs.

The largest BMW factory in the world is in South Carolina.

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