On March 5, President Trump granted a one-month exemption from newly imposed tariffs on Mexico and Canada for vehicles covered by the United States-Mexico-Canada Agreement (USMCA), the successor to NAFTA, after consulting with leaders of Detroit’s Big Three automakers: Ford (F) , General Motors (GM) , and Stellantis (STLA) .
During that day’s press briefing, the White House press secretary Karoline Leavitt said that the President notified the respective auto CEOs “to start investing, start moving—shift production here to the United States of America, where they will pay no tariff.”
Many automakers, beyond Detroit’s Big Three manufacturers, produce cars in Mexico and Canada to take advantage of the lower production costs afforded by the USMCA and the North American Free Trade Agreement (NAFTA) that came before it.
A BMW M2 on the production line at BMW’s San Luis Potosi plant in Mexico.
BMW
BMW’s new Ultimate Driving problem
Under the USMCA rules, at least 75% of a vehicle’s parts must originate from North America to be exempt from cross-border tariffs, which presents a unique problem for German automaker BMW.
According to a new report from CNBC, the makers of the Ultimate Driving Machine said that if the USMCA guidelines remain for tariff guidelines, its imports will be subject to levies.
“The current situation regarding the introduction of import tariffs in North America is very volatile and complex,” BMW said. “The linkage of import tariff to compliance with USMCA rules is the most recent announcement. If this regulation remained in effect, the BMW Group would be one of the affected companies.”
Outside of the eight plants in its native Germany, BMW production takes place on five different continents, including one in San Luis Potosí, Mexico, where it currently produces the BMW 3 Series, 2 Series Coupé, and the M2.
More Automotive:
The most reliable new hybrids in 2025New car buyers are in for good news about inflated pricesBMW’s newest Mini Cooper is a cool car for buyers on a budget
In a March 7 note, UBS analysts estimated that 10% of BMW’s U.S. unit sales—mostly 2 and 3-Series models— were imported from Mexico at a relatively low tariff rate. They estimate that if the USMCA rules persist, BMW will be in for a big hit to its bottom line.
“The incremental tariff should, all else equal, result in an EBIT impact of ~€400m [about $436.2 million] (before price increases), relatively small in a group context (4%),” they said. “The bigger potential threat for BMW and the other German OEMs is the potential tariff on EU-made cars, which is facing a deadline on 2 April.”
As a result, BMW came out deriding the use of tariffs, noting that it stands behind free trade as a “guiding principle” that is “of immense importance worldwide.”
“Tariffs, on the other hand, hinder free trade, slow down innovation, and set a negative spiral in motion,” the automaker said. “In the end, they are detrimental to customers, making products more expensive and less innovative.”
Related: A major steel company is helping its workers buy American cars
BMW already has a huge U.S. manufacturing footprint.
Beyond the Big Three, automakers from around the world have made significant investments in domestic automobile manufacturing. For instance, Japanese automaker Honda has held a footprint in Ohio and Indiana as far back as 1981, and South Korean Hyundai recently opened a multi-billion dollar “metaplant” to build its EVs.
BMW has a massive manufacturing presence in the United States. According to BMW, its Spartanburg, South Carolina plant is the largest BMW factory in the world, capable of assembling more than 1,500 X-Series SUVs every day.
Recently, the automaker boasted that it assembled 396,117 cars and was the leading automotive exporter by value in the United States last year. In 2024, it exported $10 billion worth of cars to countries like its native Germany and other key luxury car markets like South Korea, China, Canada, and Great Britain.
Related: Veteran fund manager unveils eye-popping S&P 500 forecast
