Fiat Chrysler Could Feel The Burn From US Import Tariffs

Government

See, it's not just foreign automakers that would be screwed.

Anyone who has turned on the news lately has probably heard about President Trump's planned tariffs on steel and aluminum, which would create a 25% import duty on foreign-built cars. The auto industry is in panic mode, as foreign automakers like Volvo ponder how their model ranges could be severely impacted by these tariffs. While foreign automakers stand to lose big, domestic automakers aren't 100% safe. Fiat Chrysler Automobiles may stand to take a big hit, this according to a report by Automotive News Europe.

Even though FCA is made up of several American brands including Chrysler, Jeep, Dodge, and RAM, the company does import several cars from outside North America. Last year, FCA imported 158,553 cars and trucks from outside of the NAFTA area, which would all be taxed under Trump's tariffs. Of the 158,553 cars, 103,434 were the Jeep Renegade SUV, which is built in Turin, Italy. All Alfa Romeo and Maserati models are also built in Italy, as is the Fiat 500X (which is built in the same factory as the Renegade). Analysts Evercore ISI predict that FCA could take a 743 million euro ($866 million) annual hit with a 25% tariff.

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President Trump is also considering a slightly less harmful 20% tariff on cars built in the European Union, which would reduce FCA's losses to around 526 million euros ($613 million) annually. If the tariffs are enforced, FCA will have to consider building the cars elsewhere (which is costly), or promoting NAFTA-built models like the Compass and Cherokee. FCA also has to worry about the Fiat 500L (built in Serbia), the Ram Promaster City (built in Turkey), and the Fiat 124 Spider (built in Japan). Of the big three American automakers, FCA has the most to lose from these tariffs. 9% of FCA's sales come from vehicles imported from outside North America, compared to 6% and 4% for GM and Ford respectively.

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