Justin Cox, Director, Global Production
03 April 2018
03 April 2018
25% tariffs on EU car imports to the US: biggest losers?
President Trump’s recent talk of imposing a 25% tariff on EU car imports to the US has certainly caused a stir. But while most reports tend to focus on the large exposure of Germany’s Big 3 Premium brands to the US market, it is important not to forget the potential plight of both Honda’s and FCA’s European operations should this trade ‘war of words’ develop into something more concrete.
Honda’s Swindon facility in the UK is the sole global supply location for the new Civic 5-door variant. As the plant transitions to a single-model-only operation later this year, we expect about a third of the facility’s output to be exported to the US, making it particularly vulnerable to the imposition of heavy US import tariffs.
“Both the Renegade and the Civic are competing in highly price-sensitive market sectors.”
FCA in Europe, too, is a significant exporter to the US. But aside from the Premium Maseratis and Alfa Romeos, it is the Jeep Renegade alone that made up three-quarters of the group’s US-bound export volume last year. Built at FCA’s Melfi plant, US exports account for around 30% of the plant’s annual output.
While both the Swindon and Melfi facilities face high exposure to the US market, it is the segments that these plants sell into that raises additional concerns. Both the Renegade and the Civic are competing in highly price-sensitive market sectors. Absorbing or passing on any additional tariff cost to US consumers would be tough – certainly when compared with Premium models operating in ‘richer’ and less price-sensitive areas of the market place.
So, although Europe’s principal Premium brands have undoubtedly much to lose should the US impose tariffs on EU car imports, perhaps one should also spare a thought for Honda and FCA.