(Finance) – A 20% US duty on imports of light vehicles from the EU and the United Kingdom and a 25% duty on imports from Mexico and Canada – we read on the Energia Oltre Press Agency – could cost homes European and US automakers affected by up to 17% of their combined annual EBITDA in a worst-case scenario. This is what S&P Global Ratings underlines in its “Auto Industry Buckles Up For Trump’s Proposed Tariffs On Car Imports”, published today.
OEM MANUFACTURERS MOST PENALIZED – The ratings agency predicts that original equipment manufacturers (OEMs) could bear a significant share of the tariff increase, “but we expect mitigation measures to reduce the effect substantially.”
VOLVO AND JLR THE MOST AFFECTED BUT ALSO GM AND STELLANTIS, MORE CONTENT FOR BMW AND MERCEDES – “Particularly exposed to a potential tariff increase are premium OEMs Volvo Cars and JLR – given their heavy dependence on European production – and GM and Stellantis due to the volume of cars they assemble in Mexico and, partly, Canada. The risks for BMW and Mercedes are more limited,” said Lukas Paul, credit analyst at S&P Global Ratings.
HIGH DUTIES COMBINED WITH CO2 REGULATIONS IN EUROPE AND COMPETITION FROM CHINA MAY INCREASE THE RISKS OF CAR MANUFACTURE DOWNGRADES – S&P Global Ratings finally predicts that “mitigation actions will make potentially higher tariffs manageable, but the combined effects of tariffs, stricter regulation of CO2 emissions in Europe starting in 2025 and pressure on earnings due to greater competition in China and Europe could increase the risk of downgrading.”