PETER SIGAL

Trump's tariff threat could impact PSA's U.S. return

Peter Sigal is a France-based correspondent with Automotive News Europe.Peter Sigal is a France-based correspondent with Automotive News Europe.
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U.S. President Donald Trump’s threat to impose tariffs on European cars exported to the U.S. has worried PSA Group, which doesn’t (yet) sell vehicles in North America.

PSA CEO Carlos Tavares said that if Trump imposes tariffs were imposed it might negatively affect his 10-year plan to re-enter the U.S. market.

"If the overall framework of tariffs change, it may have an impact on our strategy,” Tavares said at the Geneva auto show on Tuesday. “That’s clear, because if we don’t have a profitable business plan, then we don’t go.”

Under PSA’s Push to Pass strategic plan, the automaker will start selling cars in the country by 2026. It quit the U.S. in the early 1990s.

The French automaker has established a beachhead with mobility services, and appointed former Nissan executive Larry Dominique to grow the business as it learns about American consumer preferences.

"The tariffs, if they were to exist, would have an impact on the way we go to market, because we have a very staged and step-by-step approach,” Tavares said. "That means that at the beginning we would source the cars from outside the U.S., given the very limited volumes. If this was to change we would have to reassess our strategy.”

The threat of a trade war has clearly spooked not only automakers but also investors. BMW and Daimler share prices slumped after President Trump’s tweet about auto tariffs over the weekend when he warned the EU not to retaliate against his plan to impose tariffs on aluminum and steel.

Uncertainties about trade are a concern for any global business, of course. In recent years, automakers have sought to navigate Brexit, ongoing NAFTA renegotiations -- and now a possible U.S.-European tariff spat over raw materials. In all three cases, no significant changes to trade policy have materialized, despite often-heated rhetoric and plenty of hand-wringing.

Seen in this light, Tavares cautioned against any overreaction. "We believe we need to make a distinction between what is a negotiating position and what is an actual decision, so let's step back a little bit,” he said. "Of course, we prefer global trade and we prefer open markets. That's much better for everybody at the end of the day. I feel that good sense will prevail.”

Brexit bonus

Tavares even managed to spin the lack of progress in Brexit negotiations as a good thing for PSA, which operates two plants in the UK that it inherited from General Motors when it acquired Opel/Vauxhall last year. Unfavorable trade terms for Britain could render those plants too costly to operate.

“To a certain extent we are lucky,” he said. “There is no more motion on a (Brexit) deal, so we have the time to close the quality and competitiveness gap at these plants.”

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