- To avoid the new tariffs, vehicles need to source at least 75% of parts from North America.
- Approximately 10% of the new cars sold by BMW in the US are imported from Mexico.
- The new tariffs could hit BMW’s EBIT by approximately €400 million ($434 million).
BMW won’t be able to avoid the new tariffs imposed by President Donald Trump on vehicles made in Mexico and Canada, but rivals Volkswagen and Stellantis will. The irony of this is that BMW manufactures hundreds of thousands of vehicles in the US each year, making it the country’s top vehicle exporter by value. In 2024, the company exported nearly 225,000 SUVs and crossovers to international markets.
Read: After Saying Detroit’s Big 3 Were Excited About Tariffs, Trump Talks To Big 3 And Pauses Tariffs
As part of his efforts to boost domestic production, the President recently imposed a sweeping 25% tariff on imports from Mexico and Canada. However, he quickly granted a 30-day reprieve for the auto industry, announcing that cars built in accordance with the United States-Mexico-Canada Agreement (USMCA) trade deal would be exempt from the tariff.
The Rules of Engagement
Under the terms of the USMCA, at least 75% of a vehicle’s parts need to come from North America for it to be exempt from the new tariffs. Volkswagen has confirmed that the cars it builds in North America meet those criteria, so it won’t be feeling the pain of this 25% tariff.
“Our North American assembled VW-brand vehicles meet the USMCA rules of origin and are exempted from the 25% tariffs,” VW told CNBC. “As a global automotive manufacturer, we are monitoring developments in North America very closely and assessing any potential effects on the automotive industry and our company as a result of the tariffs announced for the USA, Canada, Mexico, and the European Union.”
BMW in the Crosshairs
Things aren’t so rosy for BMW. . While the company does sell a lot of its U.S.-built cars locally, about 10% of the BMWs sold in the U.S. are imported from Mexico. Models like the 2-Series and 3-Series are part of that group, and with this new tariff in place, they’re suddenly a lot less affordable. BMW has called the trade situation in North America “very volatile and complex,” confirming that it will “definitely be one of the affected companies.
“Our position remains unchanged: Free trade, which has always been a guiding principle for the BMW Group, is of immense importance worldwide,” the brand stated. “Tariffs, on the other hand, hinder free trade, slow down innovation, and set a negative spiral in motion. In the end, they are detrimental to customers, making products more expensive and less innovative.”
UBS analysts are predicting that the new tariffs could dent BMW’s earnings before interest and taxes (EBIT) by around €400 million (~$434 million), assuming they don’t jack up prices to offset the damage.
Stellantis Skates By
In stark contrast, Stellantis, which owns the Chrysler, Jeep, Dodge, Alfa Romeo, Fiat and Maserati brands, has sidestepped this tariff mess altogether, thanks to the USMCA-related exemption. The company has also thanked President Trump for helping keep its North American operations tariff-free.
“We share the President’s objective to build more American cars and create lasting American jobs,” the company said in a statement. “We look forward to working with him and his team.”
