Automakers Give Investors Mixed Takes on Coming Tariff Risks

Car companies including BMW and Nissan, set to face hefty tariffs on cars and imported parts, have been giving shareholders different perspectives on how new trade policies could shake their businesses under President Donald Trump.

Trump has pledged to impose 25% tariffs on auto imports starting on April 3, sending a chill through the companies that move cars and auto parts into and out of the US—as well as consumers fearful of higher car prices. Trump gave a one-month grace period for tariffs in March on automobile imports from Mexico and Canada, which are now set to kick in. The tariffs carry major implications for prices since parts often cross those borders several times.

Automakers have issued a flurry of updates to shareholders in the past two months, divulging in annual reports or on earnings calls how they’re navigating the trade uncertainty. Their viewpoints, however, have been as varied as their brands: While German multinational BMW asserted that tariffs “set a negative spiral in motion,” Stellantis—headquartered in the Netherlands and known for brands from Maserati to Jeep—says it’s excited that the administration wants to support US manufacturing.

The uncertainty of the new tariffs has the industry in “a complete mess,” said David Whiston, a Morningstar strategist focused on the auto industry. Companies are caught in the uncertainty of whether they will absorb all of the new costs or how much will hit suppliers, dealers and consumers, he said.

“Where they can, automakers will try and change a supplier to a US-based one. But they might not have a viable option right away,” Whiston said. Tariffs may eventually trigger a Trump goal to convince auto companies to build new US plants to avoid trade costs, but “everyone’s waiting to see how long these actually last,” he said.

Chief financial officers across the economy are increasingly unnerved by the tariffs, according to a recent study by the Federal Reserve Bank of Richmond. Here’s a sampling of auto industry responses:

BMW

BMW said in an email that tariffs “hinder free trade, slow down innovation, and set a negative spiral in motion.”

“We should be discussing reducing trade barriers rather than creating more,” the company said.

In its annual report on 20 March, BMW highlighted that, because of its strong presence in the USA and China, “any intensification of the trade dispute be-tween the countries could be a potential source of additional risk exposure.”

BMW said tariffs from the US and China “will have a negative impact on earnings in the low three-digit million range.”

Stellantis

Doug Ostermann, Stellantis NV’s CFO, said on March 18 that the company has been talking to the administration about tariff policies.

Ostermann said he appreciates the ability to give input and help the administration understand the industry’s issues while assisting the White House achieve its policy objectives. He said it’s “of course, very exciting for us to have the administration so focused on trying to support US manufacturing.”

Ostermann noted that the company produces vehicles in Canada and Mexico and has been looking to “mitigate any short-term impact,” adding that he’s sure the company will adapt to the changes.

Ford

Ford Motor said in its annul report from February that tariffs on imports to the US from Canada and Mexico, in addition to China, “would have a significant adverse effect, including financial, on the overall automotive industry, Ford, and our supply chain.”

The company also said the tariffs could have “a significant impact” on its production.

For example, a Ford Mustang is assembled in the US, with 60% of parts from the US or Canada, and 17% of content from Mexico, according to Morningstar research.

GM

Paul Jacobson, General Motors’ CFO, said in February that while tariffs are an obstacle, “we’re going to have to figure it out.”

“The more we panic about what it might look like, the less time we’re spending actually planning on how would we adjust the business.”

“Because of that mentality, I think we’re a little bit ahead of it,” he said, adding that there might still be changes and adjustments to make.

A GM Cadillac Escalade, for example, is assembled in the US with 37% of parts from the US and Canada and 36% from Mexico, according to Morningstar research.

Nissan

Makoto Uchida, CEO of Nissan Motor, said on a February earnings call that the company has been working on new plans in response to tariffs imposed on Mexico, where Nissan and Infiniti export from.

Uchida said some of those models could be produced in Japan, but that would have a huge impact on the company’s profits.

—With assistance from Isabel Gottlieb