VW Among Several European Automakers To Halt Vehicle Shipments, Raise Prices, In Response To Tariffs

Here come the price hikes…

European automakers are hiking prices and shifting production to the U.S. in response to Trump’s auto tariffs. Volkswagen will add import fees to vehicle prices, while Volvo and Mercedes-Benz are considering expanding U.S. manufacturing to avoid the 25% duties, according to Bloomberg.

German brands like BMW, Porsche, and Mercedes are especially exposed, but strong U.S. demand—particularly for SUVs—keeps the market attractive despite the rising costs.

Trump’s tariffs, which took effect Thursday, mark a “fundamental turning point in trade policy,” said Hildegard Müller, head of Germany’s auto lobby VDA. She warned the move would create “only losers,” including U.S. consumers facing “rising inflation and a reduced choice of products.”

The Bloomberg article says that Volkswagen notified U.S. dealers it will add import fees and temporarily pause shipments from Mexico and Europe, according to Automotive News. A spokesperson confirmed the memo but declined to elaborate.

The tariffs have already shaken the industry—buyers are rushing to make purchases, and shares of German automakers dropped sharply Thursday. Mercedes and Volkswagen fell over 3%, while BMW slipped as much as 4.3%.

Mercedes may move production of a model to Alabama to offset tariffs and is weighing pulling its cheaper cars from the U.S. after a 58% sales jump in its top-selling import, the GLC SUV. Germany’s economy minister backed EU talks with the U.S. but warned of a “clear and decisive response” if no deal is reached, calling the tariffs a risk to global stability.

Volkswagen, which builds cars in Tennessee, still imports key models from Europe and Mexico. The U.S. now makes up 20% of its revenue, helped by a 7% sales boost in 2024.

BMW imports 60% of its U.S. sales and depends on European parts for its South Carolina plant. Mercedes’ Alabama factory faces similar supply chain exposure.

Volvo plans to expand U.S. production, while Ferrari will hike U.S. prices up to 10%. British automakers warned Americans will likely pay more for iconic brands like Bentley and Mini.

“These tariff costs cannot be absorbed by manufacturers,” said Mike Hawes of the UK’s auto trade lobby, “thus hitting U.S. consumers who may face additional costs and a reduced choice of iconic British brands.”