Volkswagen (VW) is reportedly developing contingency strategies to address potential US tariffs on imports from Mexico, while its German rival BMW is preparing to bear the financial impact, Reuters reported.
Last week, the Trump administration offered a temporary one-month extension to certain sectors.
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It stated that vehicles manufactured in North America would be exempt from the 25% tariffs, provided they complied with the intricate rules of origin outlined in the 2020 US-Mexico-Canada Agreement (USMCA), which was established during Trump’s first term.
For decades, the American automotive industry has benefited from the free trade agreement between the US, Canada, and Mexico.
It now focuses on adapting its supply chains in case the trade conflict persist, a potentially costly endeavour.
VW has dismissed last-minute plans to move Skoda and SEAT/CUPRA vehicles across the Mexican border.
The company has a major plant in Puebla, which produces around two-thirds of the cars it sells in the US, according to the news agency.
However, BMW is said to have reassured its US dealers that it will not pass on the additional cost of new tariffs on imports from Mexico, at least for the next few weeks.
BMW’s move is in contrast with several other companies, including those in the consumer and industrial goods sectors, which have indicated that they are likely to raise prices to compensate for the cost of the tariffs.
Earlier this week, German luxury carmaker Porsche announced it was examining ways to absorb the cost of potential tariffs, anticipated to be 25% on US imports from Europe, without negatively impacting its profit margins.
This suggests that prices may be increased to compensate for any potential decline in unit sales.
Earlier this month, VW introduced the ID. EVERY1 concept, a preview of its 2027 entry-level electric vehicle launch.
