German carmakers say Trump tariffs would hurt US consumers, industry

By Nick Carey

LONDON (Reuters) - U.S. President Donald Trump's tariff plans would mean higher car prices for U.S. consumers and hit global automakers, Germany's powerful car industry warned on Tuesday, as auto stocks fell on the prospect of higher U.S. import duties.

Hildegard Mueller, the president of Germany's VDA auto association, told an annual press conference that Trump's threatened tariffs would drive up U.S. inflation.

"Donald Trump promised in his election campaign to reduce inflation," she said. "In this respect, we are hoping for further discussions on this topic."

Trump, who took office on Monday, did not immediately implement the wide range of tariffs he had promised, but said they were still an option and indicated that tariffs of 25% on Canada and Mexico could be imposed as early as Feb. 1.

In the past, Trump has used the threat of tariffs to push automakers to move more production to the United States.

Global automakers make cars in Mexico for sale in the United States, and the Central American country is an integral part of the supply chain for U.S. auto production.

Major suppliers like Bosch and Continental have been working on ways to move some production and mitigate the impact, but U.S. tariffs on Mexican auto imports would hurt U.S., European, Japanese and South Korean automakers and suppliers alike.

In Asia, the continued threat of U.S. tariffs hit shares of Honda, Mazda, Hyundai and Kia, which all produce vehicles in Mexico.

In Europe, Volkswagen and Stellantis, which would be particularly vulnerable to tariffs on Mexican production, were down 0.8% and 1.3% respectively.

Volkswagen, the world's second-largest automaker, said it was "concerned about the harmful economic impact that proposed tariffs by the U.S. administration will have on American consumers and the international automotive industry".

The company highlighted planned investments exceeding $10 billion in the U.S., split between its Chattanooga plant and a joint venture with Rivian.

Automakers have been negotiating with Trump's team ahead of his inauguration, hoping to prevent the imposition of tariffs.

Stellantis Chairman John Elkann has spent four days in Washington meeting with Trump and top administration officials, according to a company source.

Elkann, who is currently steering Chrysler and Jeep parent Stellantis while it seeks a new CEO, was among global executives attending celebrations for Trump's inauguration on Monday.

Volkswagen has also been in close contact with the Trump administration over tariffs, two people familiar with the matter said.

Volkswagen and German rivals Mercedes-Benz and BMW all have plants in Republican states that voted for Trump, and all have emphasized their commitment to U.S. production.

The VDA's Mueller said this "should be taken into account" in any talks on tariffs.

"We have a lot to offer, many jobs in the USA, a functioning production network that also creates growth and prosperity in the USA," she said. "If tariffs are imposed, we have to consider how we can respond to them in concrete terms."

(Reporting by Nick Carey. Editing by Mark Potter)