United States, February 10, 2025 – The recently announced US tariffs on imports from Mexico and Canada, if eventually implemented, could put pressure on the credit metrics of some global automakers. However, automakers plan to take various mitigating measures, which could offset the impact of the tariffs on their credit profiles.
On 1 February, the US announced a 25% tariff on most imports from Mexico and Canada (and a 10% tariff on China). The day before these measures were due to take effect, agreements with Mexico and Canada were reached to pause them for one month for negotiations on such subjects as migration, border security and trade. It is unclear what will emerge from the US-Mexico and US-Canada negotiations and how far the US is prepared to revise its proposals.
The potential 25% tariffs on Mexico would have the most significant implications for global automakers due to large exports of vehicles produced in the country to the US, followed by the proposed measures against Canada. The additional tariffs against China are likely to have a limited impact on the sector due to decoupling from the country’s supply chains in previous years.
Potential implications of the tariffs are likely to vary by company and will depend on the direct exposure to exports from Mexico and Canada to the US and the ability to pass tariffs on to customers, cut costs, increase prices on other vehicles to spread the costs of the tariffs, reroute shipments or implement other mitigating measures. It is not expected any material changes in the production footprints of supply chains until there is clarity about the tariff implementation.
Honda, General Motors, Nissan and Stellantis have the highest exposure to the US tariffs in a rated portfolio of original equipment manufacturers due to the high share of vehicles imported to the US from Mexico and Canada in their global sales.
Issuers with adequate or ample rating headroom will have greater flexibility to withstand the impact of the US tariffs than those with tight headroom. The Negative Outlooks on Nissan and Stellantis reflect weak performance in North America, which led to a drop in the companies’ profitability and cash flows even before the tariffs were announced.
Potential implications in this sector will be assessed based on prospects for the tariffs being implemented in full, whether they are likely to be temporary, retaliatory measures and corporates’ mitigating strategies.
Source: Fitch Ratings
Atlantic Investors Service 
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