VW, Daimler, BMW brace for U.S. tariffs as truce nears end

MUNICH -- Volkswagen Group, Daimler and BMW are bracing themselves after the U.S. circulated a draft report on tariffs and European Commission President Jean-Claude Juncker said a looming trade war between Europe and the U.S. may soon come to an end.

The report is part of the U.S. Commerce Department's probe into whether to impose levies on automobiles, vans and light trucks as well as car parts. Commerce has until February to hand its findings to President Donald Trump, who previously threatened a 25 percent tariff on imported cars.

European automakers, despite exemptions for their output from U.S. and Mexican factories, will be hardest hit, alongside imports from Japan and South Korea, RBC Capital Markets analysts said on Tuesday.

Suppliers will have even more difficulties from a similar levy on parts imports, according to the bank, citing an estimate from the American Automotive Policy Council pointing to a $2,000 increase in the cost of a U.S.-manufactured vehicle and a $2,400 rise when tariffs on steel and aluminum are added.

The European Union last year shipped 1.1 million cars to the U.S., led by VW Group brands Audi, and Porsche, and BMW. The planned U.S. tariffs would hit autos and parts worth 58 billion euros ($65 billion), the Commission said in June, adding about 10,000 euros to the price of a European-built car.

Flaring trade tensions between the U.S. and the EU led to a temporary truce in July after Juncker met with Trump in Washington. Juncker signaled on Monday that the hiatus may only last until year-end.

On the brighter side, BMW produces about 70 percent of its SUVs in the U.S., and Mercedes-Benz about one-third. Among Japanese automakers, over 90 percent of Honda's vehicles destined for the U.S. market are manufactured in North America and more than half of those made by Toyota.