It’s hard to understand the effects of US president Donald Trump’s seemingly chaotic policies. His "flood the zone with shit” rhetoric, inspired by rightwing media executive and former White House strategist Steve Bannon--or multiplying announcements to prevent the media from taking a serious look at presidential policies--has seriously shaken the automotive sector: on 27 March, Trump announced a imported into the United States.

First affected were the American manufacturers themselves, Ford and General Motors, and Stellantis: these three groups import hundreds of thousands of vehicles and spare parts from their sites in Mexico and Canada. Stellantis decided to directly suspend two factories outside the United States and put 900 American employees on short-time working. Ford and GM urgently stockpiled parts to avoid running out of fuel once the customs duties were in place. According to the Center for Automotive Research, these new tariffs could represent $42bn in annual costs for the Big Three.

Ford CEO Jim Farley talks of “organised chaos”. The former CEO of Stellantis, Carlos Tavares, criticized the pricing as a blow to the entire North American chain before leaving the company. GM CEO Mary Barra warns that each car produced with imported parts will cost $5,000 more and that imported models will see their prices rise by up to $8,600.

According to the Center for Automotive Research, the tariffs will have an impact of $107.7bn for US manufacturers ($43bn due to imported parts used in local production and $64.7bn due to imported vehicles including those from Canada and Mexico), for 17.7m vehicles.

In three days, carmakers in Europe have seen their share prices plummet: -8% for Volkswagen, -6% for BMW, -9.3% for Stellantis.

BMW has decided to increase capacity at its Spartanburg plant in South Carolina by 80,000 units a year. Volkswagen announced that it plans to produce certain Audi and Porsche models there. Mercedes accelerated a billion-dollar investment in its Alabama site to produce SUVs and electric saloons. Ferrari is opting for a simpler solution and raising the price of its vehicles in the US by 10%, assuming that its customers will bear the extra cost.

Volkswagen wants to do “everything possible to remain a reliable investor and partner in the US,” Volkswagen Group chairman Oliver Blume assured the Frankfurter Allgemeine Zeitung newspaper in an interview published online. “For Audi, production in the United States would be part of our development strategy,” added the boss of the manufacturer with ten brands, including the Audi range of top-of-the-range vehicles. “We have an offensive strategy with exciting, tailor-made and attractive projects for the American market. That’s what we're putting in the balance. Constructive discussions are underway with the US government,” added Blume added, who is also chairman of Porsche’s management board. On the other hand, he ruled out US production for Porsche sports cars, for which the US is the most important market, because the volumes involved are too low, around 70,000 vehicles a year.

According to Bloomberg, Mercedes-Benz could stop importing its cheapest models, such as the GLA and CLA Classes , or even the C-class. A spokesperson said this scenario was unfounded, adding that the company was concentrating on continuing to grow as it did last year (+10% sales).

The German Association of the Automotive Industry (VDA), which represents 600 companies in the sector in Germany, is talking about a “fatal signal for free trade.”

Hyundai-Kia puts $21bn on the table

On the Japanese side, the impact is massive: In 2024, Japan exported 1.35m vehicles to the United States, and the new tariffs represent an estimated loss of $4.6bn a year for Honda alone. Honda immediately announced a radical plan: 90% of vehicles sold in the United States would be manufactured on American soil by 2027. It will repatriate production of its CR-V from Canada, its HR-V from Mexico and the future Civic hybrid to its plants in Indiana and Ohio. This represents a 30% increase in the group’s production on American soil.

In the same vein, Toyota is reviewing the launch of the next generation of its best-seller, the Rav4 (475,000 units sold in the United States in 2024), initially planned for Canada and Japan and which should be assembled in Kentucky from 2027.

Nissan is reducing production of its Rogue SUV in Japan by 13,000 units between May and July to avoid having to pay additional customs duties. The Kyushhu plant will idle for a quarter while it waits to see what happens next.

Whilst the South Korean Hyundai-Kia group seems little affected, in reality it has caught everyone off guard by announcing a plan to invest $21bn in the United States by 2028--a doubling of its investments since entering the North American market, where it says it has created 570,000 jobs. In March, Hyundai chairman Euisun Chung unveiled two huge projects alongside Donald Trump: a giant steelworks in Louisiana (worth $5.8bn) and an electric car factory in Georgia (worth $7.4bn dollars) to produce 300,000 vehicles a year. As the group also plans to move part of Korean production of the Kia 5 or Hyundai Elantra to the Alabama plant, customs duties are reduced.

Up to $20,000 price increase

An analysis by the Anderson Economic Group estimates that the price increase on imported vehicles could reach up to $12,000 for certain top-of-the-range models. This could rise to as much as $20,000 for vehicles manufactured by Audi, BMW, Jaguar-Land Rover, Mercedes-Benz, Genesis and Lexus. The president of Nissan Americas, Christian Meunier, fears that small models produced in Mexico, such as the Versa ($20,000), will become unsellable: “The affordable segments risk disappearing, and with them, access to new cars for the working classes.”

For AEG, “US consumers will absorb a tariff cost in the first full year that could exceed $30bn… Investors and employees of automakers, suppliers and dealers in the auto industry will absorb at least an additional $30bn in tariff costs” in the first year.

And that’s just an estimate of the consequences. An underestimate, according to the experts. Other aspects will be added. Ford has announced that it is adjusting its vehicle sales in China. US president Trump has imposed customs surcharges on Chinese imports of up to 145%--only 25% for vehicles and spare parts--in addition to the pre-existing 20%. In retaliation, Beijing added additional tariffs of 125% on US vehicles.

An F-150 Raptor costs nearly $100,000 in China, WSJ sources said. According to its latest annual report, Ford sold Chinese dealers 442,000 vehicles in 2024, compared with 467,000 in 2023 and 495,000 in 2022. It states that it will have a market share of 1.6% in 2024, compared with 2.1% in 2022. Ford has stopped shipping its F-150 Raptors pickups, Mustang cars and Bronco SUVs, which are assembled in Michigan, as well as its Kentucky-made Lincoln Navigators.

This article was originally published in .