Bankinter | The measures will come into force on 3 April for all cars not manufactured in the United States. Trump also added that the tariffs would also affect car components, and that these would come into force by 3 May at the latest. He also stated that the tariffs would be permanent in nature and without exceptions.
Bankinter analysis team’s view: Bad news for the sector in general. Currently, Europe imposes a tariff of 10% on vehicle imports from the United States, while the United States taxes those from Europe at 2.5%. In this context, an additional increase in the current US rate of 7.5% to 10% was being considered. However, the imposition of tariffs of 25% as an initial rate is news that is clearly negative for the sector. Among European manufacturers, Mercedes would be the most affected, as 55% of its sales in the US come from its European factories (compared to 35% for BMW and Volkswagen). In terms of EBIT, the potential impact on Mercedes would be around 25%, on Volkswagen 20% and on BMW 15%.
Our recommendation on the sector at the moment is to sell the shares. Momentum is clearly negative and we cannot identify any catalysts in the short/medium term. There are important factors weighing on the main European manufacturers. The most relevant are: (i) Concerns about growth in China, which accounts for between 30% and 40% of sales, and overcapacity in this market, which is resulting in a fierce price war. (ii) The fall in demand for electric vehicles as regulations force a reduction in emissions. (iii) The tariff war, not only with the United States, but also with China.
