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U.S. autos imports tariff to take effect on April 2

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Car parts tariff to be imposed beginning May 3

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Foreign automakers warn costs in US will rise, jobs at

stake

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Shares in U.S., European automakers slide

(Recasts with Europe share reaction, context)

By Nora Eckert and Victoria Waldersee

BERLIN/DETROIT, March 27 (Reuters) - Automaker stocks

around the world slumped on Thursday after U.S. President Donald

Trump said that he would impose 25% tariffs on all vehicles and

foreign-made auto parts imported into the United States.

Volkswagen, BMW, Mercedes-Benz, Porsche and Continental lost

4.5 billion euros ($4.84 billion) in combined market value on

Thursday, as investors panicked at the prospect of more costs

and complexity in an industry already struggling with a slow

ramp-up of electrification and high logistics costs.

Carmakers must now decide whether to localise more

production in the U.S. to avoid the tariffs, swallow the cost,

or pass it onto consumers.

Companies including Volvo Cars, Volkswagen's

Audi, Mercedes-Benz and Hyundai

have already said they will move some production to

the region this year.

But some CEOs have, in private, expressed reluctance to make

long-term business decisions based on what could be a short-term

policy.

"These policies have already made equity and debt markets

extremely nervous, and we know that the president regards the

Dow Jones index as a key barometer of his success," analysts at

Bernstein Research said in a note.

"It is hard to judge the duration of such chainsaw-like

policies if these cause a market slump that does not appear to

be transitory," they added.

Shares in Stellantis ( STLA ) and Porsche

sank 4% on Thursday, while Mercedes-Benz was down

2.8%. . General Motors ( GM ) slumped 6.5% in premarket trading, while

Ford was down 4.3%.

Porsche, which has no U.S. production base,

saw a larger drop of 4.9%.

'DISASTER FOR THE SECTOR'

The new levies could add thousands of dollars to the cost of

an average U.S. vehicle, contradicting Trump's promises to

combat consumer product inflation.

Levies on car imports take effect on April 3, while those on

auto parts begin from May 3, the White House said on Wednesday.

Nearly half of all cars sold in the U.S. last year were

imported, research firm GlobalData says, with vehicles often

crossing between Canada, Mexico and the United States multiple

times in the production process.

On Wednesday, Trump reiterated that he expected the auto

tariffs to prompt automakers to boost investment in the United

States, instead of Canada or Mexico.

Automakers in North America have largely enjoyed free trade

status since 1994. Trump's 2020 U.S.-Mexico-Canada Agreement

(USMCA) imposed new rules to spur regional content production.

After clamping tariffs of 25% on Mexico and Canada in early

March, Trump allowed a one-month reprieve for vehicles produced

in compliance with the terms of his USMCA.

The new rules do not extend that reprieve.

NON-U.S. CONTENT TO BE TAXED

Importers of automobiles under the USMCA will get the chance

to certify their U.S. content so that only non-U.S. content is

taxed, the White House said.

An exemption for imports from Canada and Mexico would

provide relief for the Volkswagen brand as well as GM, Ford and

Stellantis ( STLA ), whose supply chains are intertwined across the

region.

Ultimately, the impact will be felt across the industry,

said Moritz Kronenberger of Union Investment, which holds shares

in Volvo, Volkswagen, Mercedes-Benz and Continental, describing

the tariffs as "a disaster for the entire sector."

Before the new tariffs were unveiled, automotive services

provider Cox Automotive predicted they would add $3,000 to the

cost of a U.S.-made vehicle and $6,000 to vehicles made in

Canada or Mexico, without exemptions.

If tariffs go through, by mid-April, Cox expects disruption

to "virtually all" North American vehicle output, leading to

20,000 fewer vehicles a day, or a hit of about 30% to

production.

($1 = 0.9294 euros)