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Stellantis has told investors that Donald Trump’s relief measures for the car industry are “generous” enough to mostly offset its tariff exposure for US-made vehicles for this year.
Doug Ostermann, the Jeep and Fiat owner’s CFO, however, warned that the shift in Trump’s trade policy was “so significant” that it would require a hard review of its broader manufacturing strategy to protect its profits.
“As the situation evolves, we will need to calibrate our North American investments, footprint and employment to ensure the profitability of our company,” Ostermann said.
The comments on Wednesday came as Stellantis and Mercedes-Benz became the latest carmakers to pull their guidance due to trade uncertainty.
With the frequent changes in tariff policy, companies have struggled to keep pace, while profits have fallen sharply during the first quarter even before the full force of the 25 per cent levies on imports of all foreign-made cars have taken effect.
Ola Källenius, chief executive of Mercedes-Benz, said on Wednesday that “you can calculate the crude effect of what the tariffs mean mathematically” but their impact on customers, suppliers and rivals would play out in an “asymmetric way”.
In a speech in Michigan on Tuesday, Trump offered small rebates to carmakers that produce their vehicles in the US to offset the costs of his broader levies, as well as an exemption from the administration’s tariffs on steel and aluminium for imported parts.
Components from Mexico and Canada that are compliant with the rules of the 2020 USMCA trade agreement will remain tariff-free. Non-compliant vehicles will face a maximum tariff of 25 per cent.
The tariff rebate also allows carmakers that assemble their vehicles in the US to reclaim up to 3.75 per cent of the retail value of the car for the next year. It will drop to 2.5 per cent from May 1 2026 and be phased out completely on April 30 2027.
In the case of Stellantis roughly 80 per cent of the US-manufactured vehicles are compliant with the USMCA.
If the non-compliant portion can be brought to 15 per cent, Ostermann said: “The 3.75 per cent of the manufacturer’s suggested retail price should cover your tariff exposure for this first year.”
Carmakers could try and mitigate the tariff cost through means including raising the retail price of vehicles while using incentives to sell them at a lower price to obtain higher rebates.
On Wednesday, Stellantis also reported that its quarterly revenue fell 14 per cent to €35.8bn as shipments fell due to lower production of vehicles in the US.
The situation is tougher for German carmakers such as Mercedes-Benz and Audi that have more vehicles and parts that are not compliant with the USMCA.
Mercedes-Benz’s chief financial officer Harald Wilhelm said that if the tariffs remained in place for the full year, they would reduce the company’s profit margin in its car division, which slipped to 7.3 per cent in the first quarter, by 3 percentage points.
The largest hit to margins would come from tariffs on car parts imported to the US from Mexico, while imports of models from Europe to the US as well as shipments from the US to China would also contribute to the impact.
Mercedes, which is betting that the latest model of its compact luxury cars launched this year will revive consumer enthusiasm, said first-quarter earnings before interest and taxes slumped 41 per cent to €2.3bn.
German rival Volkswagen said earnings before taxes slumped 40 per cent to €3.1bn in the first quarter. It maintained its full-year outlook but cautioned that its group operating margin would fall to the lower end of its range at 5.5 per cent due to increasing trade restrictions.
