Donald Trump repeatedly announced during his campaign that he would implement various tariffs to protect American industry. Said and done: soon there will be 25% tariffs on foreign cars and components, a decision that could cost Stellantis dearly.
Will Trump’s tariffs cost Stellantis dearly?
Many automotive companies will pay the price of Trump’s tariffs, including some proudly American ones like Ford and Tesla. In a globalized world, to be honest, it’s quite impossible to gain advantage from “protectionist” tariffs, but the Trump administration seems to have clear ideas, and only time will tell who, in the long run, will have been right.
Meanwhile, a report from a major investment bank predicts that the new American tariffs on cars and components could significantly reduce Stellantis’ annual profits: up to 75% in 2025. What’s the real irony of this story? That Stellantis is also an American group, with brands like Dodge, Ram, and Chrysler. The Italian-French-American group has important facilities in Canada and Mexico, through which it also supplies US dealerships; Trump’s tariffs will strongly impact vehicles and spare parts coming from abroad, which for Stellantis represent a significant part of its annual sales.
From April 3, 2025, chaos will begin, although Canada and Mexico will enjoy an extension until May 3, 2025, thanks to the USMCA free trade agreement. One more month, however, will change things very little, if at all. Still regarding Stellantis, the tariffs could cost the group $7.1 billion in profits, so the next CEO of the group will immediately face a difficult challenge. Certainly, Stellantis could move production from Mexico and Canada to the United States to circumvent the tariffs, which would be Trump’s real desire along with the destruction of the Canadian auto market, but all this would have a cost perhaps unsustainable for the company, as well as a waste, since perfectly functioning plants already exist.
John Elkann has already said that Stellantis is committed to creating new jobs in the USA, but first wants to ensure that the company is not forced to raise car prices, a move that would be destructive for the company’s coffers. Meanwhile, confirming that the situation is serious, Stellantis stock has fallen to its lowest in years after confirmation of the tariffs. If even Tesla, owned by the trusted Elon Musk, is opposed to Trump’s new tariffs, perhaps this is truly a policy that needs to be reconsidered.