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Carmakers weigh risk of price hikes as Trump tariffs loom, sources say
Published by Global Banking & Finance Review®
Posted on March 28, 2025
3 min readLast updated: January 24, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on March 28, 2025
3 min readLast updated: January 24, 2026
European carmakers may raise prices due to US tariffs. Trump imposes 25% duties, impacting German automakers heavily.
By Christina Amann and Victoria Waldersee
BERLIN (Reuters) - European carmakers are trying to work out how much their prices might have to rise in response to looming U.S. import tariffs, industry sources said, fearing any first-movers could risk a backlash from U.S. President Donald Trump.
The United States late on Wednesday announced 25% duties on imports of finished cars and certain components from April 3, dashing hopes for lower rates or exemptions after several short-term policy changes suggested there might be wiggle room.
Export-oriented car companies in Europe, most notably Germany's major automakers, are heavily exposed, with few options on how to respond in the near-term other than smaller discounts and price increases.
"Nobody can afford not to pass on the tariffs," said a source at a European automaker, adding there was a waiting game around who would be the first to raise prices.
"Nobody will take a stand in the coming months for fear of Trump's revenge."
These deliberations add to the challenges facing carmakers already struggling with lacklustre demand, high labour costs and stiff competition from Chinese rivals.
Ferrari was the first brand to declare that it would raise prices by up to 10% on cars imported into the U.S. after April 2.
French supplier Valeo also said it would have no choice but to raise prices if tariffs on autos parts - looming from May 3 - came into effect.
But most auto industry executives are reluctant to reveal their plans, fearing retribution from the U.S. president who has made clear that his aim is for carmakers not to raise prices, but to move production to the United States, three auto industry sources, who declined to be identified because of the sensitivity of the matter, said.
Volkswagen, Porsche AG, BMW, and Mercedes-Benz all declined to comment when asked about price increases as a result of tariffs.
Among the German automakers, Porsche and Volkswagen's Audi - two brands with no U.S. production - have both said recently they would assess the option of price increases to mitigate tariff risks.
BMW has previously said it would keep the price of its 3 Series, one of its most popular U.S. models which is being built in Mexico and Germany, unchanged until May.
UBS analysts see a risk of at least a 10-20% hit to earnings per share at Germany's carmakers due to the U.S. tariffs on EU imports, an analysis which already factors in some mitigating price action where possible.
Carmakers like Porsche and Ferrari will have an easier time passing through some of the tariff costs for more unique models like the Porsche 911, analyst Daniel Schwarz of Stifel Research said.
For Porsche's SUVs this would be more difficult because rival models, including the Mercedes GLE and BMW X5 are produced in the United States, he added.
Another auto industry source said: "Everyone has plans up their sleeve, you just have to decide when you play which cards. It's a poker game."
(Reporting by Christina Amann and Victoria Waldersee; Additional reporting by Ilona Wissenbach; Writing by Christoph Steitz and Victoria Waldersee. Editing by Jane Merriman)
The article discusses the impact of US tariffs on European carmakers and potential price hikes.
Carmakers are considering price hikes but fear retribution from Trump.
Companies like Ferrari, Volkswagen, Porsche, BMW, and Mercedes-Benz are mentioned.
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