By Victoria Waldersee and Christina Amann
BERLIN (Reuters) -Volkswagen on Tuesday warned against the "harmful economic impact" of tariffs that U.S. President Donald Trump is proposing on imports from Mexico, where Europe's top carmaker operates a major factory.
The comments by the German autos giant, already grappling with high costs and cheap Chinese competition at home, reflect major uncertainty following Trump's threat to possibly impose duties of 25% on goods from Mexico.
While a firm decision has not been made, Trump said such tariffs could become effective from Feb. 1.
"The Volkswagen (ETR:VOWG_p) Group is concerned about the harmful economic impact that proposed tariffs by the U.S. administration will have on American consumers and the international automotive industry," a Volkswagen spokesperson said in an emailed statement to Reuters.
"We value collaboration and open dialogue. The Volkswagen Group looks forward to continuing its longstanding and constructive partnership with the U.S. administration," the spokesperson added.
Volkswagen shares were down 0.8%, as European rivals also declined on the prospect of tariffs.
Volkswagen's Puebla auto factory is Mexico's largest and one of the biggest in the Volkswagen Group, making nearly 350,000 cars in 2023, including the Jetta, Tiguan and Taos - all for U.S. export.
Stifel analysts have reckoned that some 65% of the cars that Volkswagen sells in the United States would no longer be competitive if duties were added to Mexican imports.
In an effort to showcase its commitment to U.S. sites, Volkswagen said it was making total investments of more than $10 billion in the country, roughly split between its Chattanooga plant and a joint venture with Rivian (NASDAQ:RIVN).
"In the discussion with the new U.S. president, it is also clear that economic strength is the best response to the latest challenges," Hildegard Mueller, who leads the German car sector's lobby group VDA, said on Tuesday.
Volkswagen has been in close contact with the Trump administration over tariffs, according to two people familiar with the matter.
Last week, BMW (ETR:BMWG) CEO Oliver Zipse was in South Carolina, where the German automaker has a plant, and received an award from the state's Republican governor for its contribution to the economy.
"BMW assembles more vehicles in the U.S. than we sell in the U.S. and exports more vehicles from the U.S. than we import into the U.S.," it said, adding in 2023 it sold more than 396,000 vehicles there.