European and American automakers could lose up to 17% of their combined annual core profits if the United States imposes tariffs on imports from Europe, Mexico and Canada, according to a report from S&P Global published this Friday, in which it warns of possible reductions in the credit rating.
Premium car manufacturers Volvo and Jaguar Land Roverwhich produce mainly in Europe, and the groups General Motors and Stellantiswhich assemble large volumes of cars in Mexico and Canada, are most exposed to the threat of higher tariffs, S&P said.
The elected president donald trump said on Monday that he would impose a 25% tariff on imports from Canada and Mexico until they clamp down on drugs and migrants crossing the border, a move that would appear to violate a free trade agreement between the three countries.
Analysts and experts fear that tariffs could be more damaging to European automakers such as Volkswagen and Stellantis and its suppliers than any direct tariffs on EU products.
“We hope that mitigation actions will make potentially higher tariffs manageable, but the combined effects of tariffs, stricter CO2 regulation in Europe from 2025 and pressure on profits from stronger competition in China and Europe could increase risk,” S&P said.
“Rating transitions could occur as tariffs compound other headwinds by 2025,” he added.
From 2025, the EU will reduce the average emissions limit for new vehicles to 94 g/km, down from 116 g/km previously.
According to S&P, the worst-case scenario for automakers includes a 20% tariff on US imports of light vehicles from the EU and the UK, and a 25% tariff on imports from Mexico and Canada.
In this scenario, G.M., Stellantis, Volvo and Jaguar Land Rover could see more than 20% of their expected adjusted EBITDA in 2025 at risk, according to S&P analysis.
The risk is between 10% and 20% for Volkswagen and toyotaand less than 10% for bmw, ford, Mercedes-Benz and hyundai .
