Volkswagen 'Concerned' Over Trump Tariffs: Will Automakers Pass Costs To US Consumers?

Volkswagen AG VWAGY is upset about U.S. President Donald Trump‘s proposed tariffs on imports from Mexico.

The Wolfsburg, Germany-based car manufacturer “is concerned about the harmful economic impact that proposed tariffs by the U.S. administration will have on American consumers and the international automotive industry,” a Volkswagen spokesperson told Reuters.

The 25% tariff, set to be enforced by Feb. 1, could significantly impact Volkswagen, which runs one of its major plants in Puebla, Mexico.

The German automaker cautioned that these tariffs could harm both U.S. consumers and the global automotive industry, according to a report from Reuters.

According to data from Edmunds, as reported by the Wall Street Journal, approximately one-third of all cars under $30,000 in the U.S. are currently manufactured in Mexico. This represents an increase from about one-fifth of such vehicles a decade ago.

It’s no wonder Mexican President Claudia Sheinbaum has warned Trump that a trade war is not in his best interest, citing how the automakers that will suffer are based in the U.S. and that Mexico could respond with its own protectionist moves.

"One tariff will be followed by another in response, and so on until we put common companies at risk," Sheinbaum said at a press conference in November per Bloomberg. "The main exporters from Mexico to the US are General Motors GM, Stellantis STLA, and Ford Motor Company F, which arrived 80 years ago. Why put in place a tariff that puts them at risk?"

Trump argues that his economic strategy will restore American manufacturing and revamp the nation's trade system.

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He promised to shift the financial burden from U.S. taxpayers to foreign competitors, stating, “Instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens.”

The effects would extend beyond new vehicles, and affect prices of replacement components such as engines, transmissions, and tires also facing price hikes.

GM, Ford and Stellantis rely significantly on Mexican factories for these parts, meaning the higher costs would eventually be passed on to U.S. consumers.

Stellantis chair John Elkann, who recently visited Trump as part of a wider effort to connect with the newly-elected government, promised to adapt to the U.S. market under the new administration, per Reuters.

Stellantis also maintains two plants in Mexico, in Saltillo and Toluca.

Price Action: VWAGY shares are trading higher by 2.66% at $10.03 on the last check Tuesday.

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