United States president Donald Trump began Trade war with Canada and Mexico. However, it is the German Volkswagen brand that can experience painful effects.
Last year 44 percent of German cars sold in the United States were manufactured in MexicoAccording to JATO Dynamics. This is due to the highly integrated North American automotive marketplace under the Trump Free Trade Agreements.
Trump's imposition of 25% tariffs on goods produced in Canada and Mexico means further problems for German car manufacturers. Now their profits on the key Chinese marketplace shrink surya due to the slowdown in request and expanding competition from local competitors.
Trump's decision besides balances Monday's car manufacturers' win erstwhile Ursula von der Leyen, president of the European Commission, announced Reducing this year's EU emissions targetswhich by manufacture It would cost billions..
Trump spoils the ranks of Germany
Over the years, German car manufacturers have utilized Mexico as a inexpensive production center. The country was “the perfect place to make cars” thanks to US trade agreements “and besides with Latin America, Europe and the mediate East,” said Felipe Munoz, automotive analyst at JATO.
Policy makers in the European Union, aware of Mexico's key function in the global automotive supply chain, They tried to defend car manufacturers from any Trump threats, amending the EU trade agreement with Mexico in January, giving European vehicle manufacturers favourable export rates to that country.
Audi, a subsidiary of Volkswagen, produces SUV Q5 in Mexico on the needs of the United States marketplace and all another markets outside China. This model was best-selling brand car in 2023. However, Trump's duties undermined this strategy.
— After investing millions in a Q5 mill in Mexico, mostly for the U.S., just a decade ago, This plant abruptly looks like an investment in a white elephant said Matthias Schmidt, European automotive analyst.
Meanwhile, Volkswagen's parent brand besides produces its most popular American model in Mexico: SUV Tiguan. Last 4th of last year in the United States sold Over 30,000 of these vehicles, which represents an increase of almost 50%. year to year. However, Volkswagen's shares fell by more than 4% to the news of Trump's duties.
Fees besides endanger home consumption, as prices in the USA are rising as a consequence of what the analysts called "trumpce". In 1 week, Atlanta Fed's GDP forecasting model has moved from forecasting yearly growth in this 4th at 2.3% to forecasting a decrease of 2.8%. A period ago, the model predicted an increase of nearly 4% in this quarter.
