Exports Suspended and Plants Shut Down: Automotive Sector Reacts to Trump

U.S. President Donald Trump’s announced new import tariffs on vehicles have sparked adverse reactions from some of the world’s leading automotive manufacturers, including Audi, Volkswagen, and Jaguar Land Rover.

The widely known “tariff bomb” — a nickname for the government’s directive imposing a 25% tariff on all cars manufactured outside the United States — triggered immediate responses in Asia and Europe, with potential ripple effects that may even impact Brazil.

Germany’s Audi, Volkswagen, and Britain’s JLR (Jaguar Land Rover) were the first automakers to respond. The trio announced a temporary suspension of vehicle exports to the United States. The move quickly gained momentum among other major manufacturers.

Stellantis, owner of strong U.S. market brands like RAM and Jeep, halted production at its plants in Canada and Mexico — where a significant portion of output is exported to the U.S. — and laid off 900 employees, including workers from U.S. territory.

Could Brazil Be Affected?

Given the reactions of major global automakers to Trump’s tariff hike on vehicles produced abroad, Brazil must ask the straightforward question: Could this affect us? Unfortunately, the answer is just as straightforward—yes.

In an interview with CNN Brazil, Marcio de Lima Leite, president of the National Association of Motor Vehicle Manufacturers (Anfavea), expressed concern over Trump’s protectionist policies and the potential repercussions for Brazil’s automotive sector.

According to Leite, Brazilian executives will need to work hard to maintain foreign companies’ interest in investing in Brazil. The reason, he said, is directly linked to other countries hit by Trump’s tariffs, such as Canada, South Korea, and Mexico. “Why invest in Brazil when there’s idle capacity in Korea and Mexico?” he asked.

It’s worth noting that the automotive industry is heavily export-oriented in the countries mentioned by the Anfavea president. Approximately 76% of Mexico’s output, 69% of Canada’s, and 38% of South Korea’s is destined for the U.S. market. With the new tariffs, these markets now face a scenario of significant idle production capacity.

Source: Canal Tech

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