Volkswagen warns of ‘harmful’ consequences from Trump’s Mexico tariffs

Volkswagen has warned that the US administration’s proposed tariffs on imports from Mexico could have a “detrimental economic impact” on both US consumers and the global auto industry.

This comes after President Donald Trump indicated this week that he intends to impose tariffs of up to 25 percent on vehicles coming from Mexico and Canada by February 1, citing concerns about immigration.

Volkswagen operates a large plant in Puebla, Mexico – its largest site outside Europe – which built nearly 350,000 vehicles in 2023, primarily for export to the United States. The German automaker criticized this proposed protectionist step, saying:

“The Volkswagen Group is concerned about the harmful economic impact that the US administration’s proposed tariffs will have on American consumers and the international auto industry. We will remain a strong advocate for free and fair trade.”

The company has invested more than $10 billion in the American market, stressing that “open markets have been the driving force behind global economic growth and prosperity.” Analysts at Stifel have previously warned that about 65% of Volkswagen’s US sales consist of vehicles produced in Mexico, suggesting that if new tariffs are imposed, the brand could become uncompetitive and even withdraw from the US market altogether.

Volkswagen shares fell 0.50 euros, or 0.5 percent, to 96.35 euros, while rival Stellantis fell 0.17 euros, or 1.3 percent, to 12.68 euros. Stellantis, which imports nearly 40 percent of its vehicles sold in the United States from Mexico and Canada, has expressed support for boosting manufacturing in the United States. The group’s president, John Elkann, reportedly spent four days meeting with Trump and senior officials in the new administration earlier this month.

The potential implementation of tariffs threatens to disrupt the United States-Mexico-Canada Trade Agreement (USMCA), the successor to the North American Free Trade Agreement (NAFTA). Both Canada and Mexico have vowed to respond with counter-tariffs if Trump goes ahead with his plan, creating the possibility of a new trade war. The Canadian dollar and Mexican peso fell against the US dollar by mid-morning on the news, falling 0.9 percent and 1.2 percent, respectively.