According to foreign media reports, on November 29, S&P Global stated in a report that if the United States imposes import tariffs on Europe, Mexico, and Canada, the total annual core profits of European and American automakers could decline by up to 17%. The report also warned that the credit ratings of the affected companies may be downgraded.
S&P highlighted that luxury car manufacturers such as Volvo and Jaguar Land Rover, which mainly produce in Europe, as well as General Motors and Stellantis Group, which assemble a significant number of cars in Mexico and Canada, are most vulnerable to tariff threats.
U.S. President-elect Donald Trump previously stated that an additional 25% tariff would be imposed on goods imported from Canada and Mexico until the two countries take measures to address issues such as illegal immigration. However, this move appears to violate the free trade agreement between the three countries.
Analysts and experts are concerned that imposing tariffs on European automakers such as Volkswagen and Stellantis, as well as their suppliers, could be more damaging than directly imposing tariffs on EU goods.
S&P noted, "We expect countermeasures to make potentially higher tariffs manageable, but the combined impact of tariffs, stricter carbon emissions regulations in Europe from 2025, and earnings pressure from increased competition in China and Europe could increase the risk of a downgrade."
S&P outlined the worst-case scenario for automakers, which includes a 20% U.S. tariff on light vehicles imported from the EU and the U.K., and a 25% tariff on vehicles imported from Mexico and Canada.
In this scenario, S&P's analysis suggests that GM, Stellantis, Volvo, and Jaguar Land Rover could face more than 20% of their adjusted earnings before interest, taxes, depreciation, and amortization at risk in 2025. Volkswagen and Toyota could face a 10% to 20% risk, while BMW, Ford, Mercedes-Benz, and Hyundai could face less than 10%.