Winners and losers of proposed EU‑US car export mechanism

Brussels is considering pursuing a potential arrangement that would allow European carmakers that produce and export cars from the US to import vehicles from the EU at reduced tariff rates, according to two sources familiar with the matter.

The discussion is part of the European Commission's efforts to broker a trade deal with US President Donald Trump and would replace the hefty 25% tariff on car and car parts imports the US administration implemented in April.

This would be a clear positive for those carmakers with major US production facilities, who would be able to use their US production to lower their exposure to tariffs.

This is what a trade deal means for the EU and how individual European carmakers would be affected:

What's at stake for the EU?

According to data from European auto association ACEA, nearly 758,000 cars worth €38.9bn (R810.65bn) were exported to the US from Europe in 2024, more than four times as many as in the other direction.

One EU diplomat said cars were a “red line” for the bloc, making a concession on cars a caveat of any deal. However, Brussels and Washington have conflicting goals as Trump wants to revive US car production while Brussels wants open markets for its sector, which is struggling with high energy costs and competition from China.

Who stands to win?

Germany's BMW and Mercedes-Benz would benefit most from a mechanism counting US exports against imports from the EU, as both companies operate large factories in the US.

BMW, for example, exported about 225,000 vehicles produced at its Spartanburg, South Carolina, plant in 2024, while it sold about 400,000 cars in the US market. It imported about 175,000 cars from other markets, less than what it exported.

Mercedes-Benz exports about two-thirds of the vehicles it makes at its plant in Tuscaloosa, Alabama, or about 170,000 based on 2024 production.

It sold about 324,528 vehicles in the US last year and imported about 235,000 from other countries.

Who would be the losers?

Volkswagen, Europe's biggest carmaker, would not benefit, as it mostly sells cars produced at its Chattanooga, Tennessee, plant locally rather than exporting them.

An industry source said for that reason, there has also been a push to get Washington to agree to investment credits, which would support foreign carmakers' plans to expand to boost local production.

Volkswagen, for example, is deciding whether to localise production of its Audi brand — which imports all its cars into the US market — via a new factory or expanding existing sites.

Porsche would also see no benefit: it has no local production and imports all its cars from Europe.

Little impact for Stellantis

Stellantis, the world's No 4 carmaker, owner of brands including Jeep, Ram and Chrysler, would not be seriously affected by such an arrangement.

Stellantis operates a number of US plants, mostly serving the local market, while import and export flows of its cars between the US and the EU have historically been low — typically small volumes of US-made trucks vs European-made models from the Alfa Romeo, Maserati and Fiat brands.

The group is far more vulnerable to any US tariffs on Mexico and Canada, as it manufactures about 40% of its North American vehicles in those two countries, particularly in Mexico.

Clear loss for Volvo

Volvo Cars is one of the most exposed European carmakers to US tariffs, as most of the cars it sells there are imported from Europe. The US accounted for 16% of group sales last year.

The company has said it will expand production at its Charleston, South Carolina factory, adding a new model with the electric EX90 that is made there.

Volvo has said the new vehicle would most likely be a plug-in hybrid mid-sized SUV, a popular option with US consumers.

Last year Polestar, which like Volvo Cars is part of China's Geely group, started producing the Polestar 3 SUV at the Charleston plant to avoid hefty US tariffs on Chinese-made cars.