Audi, Jaguar Land Rover Halt U.S. Shipments Due to 25% Tariffs

German automakers Audi and Jaguar Land Rover have temporarily halted shipments to the United States due to the impact of U.S. tariffs on imported vehicles. The 25% tariff on imported cars, which took effect on April 2, has prompted these manufacturers to reassess their supply chains and pricing strategies. Audi, which does not have a production facility in the U.S., relies entirely on imports. The company has instructed its U.S. dealers to hold back on deliveries of vehicles arriving after April 2, while focusing on reducing existing inventory. Audi's U.S. inventory, which stands at over 37,000 vehicles, is expected to last for approximately two months before the impact of the new tariffs is felt.

Jaguar Land Rover, based in the UK, has also paused deliveries to the U.S. market. The company acknowledged the importance of the U.S. market and stated that it is implementing short-term measures, including the halt in deliveries, while developing a long-term strategy to mitigate the impact of the tariffs. Nearly a quarter of Jaguar Land Rover's global sales come from North America, making the U.S. a critical market for the company.

Analysts warn that the German automotive industry could be particularly hard hit by the tariffs, with major players like Volkswagen and Mercedes-Benz facing significant challenges in the U.S. market. The industry has already been under pressure from rising production costs and plant closures. The tariffs are seen as a disastrous signal for free, rule-based trade. Similarly, the UK automotive industry, which relies heavily on the U.S. market for exports, is also expected to face severe impacts. The U.S. is the second-largest export market for UK cars, accounting for nearly 20% of total sales.

Amazon's direct sales business, known as 1P, could face significant financial strain due to the tariffs. The company's 1P business, which involves Amazon acting as a retailer, purchasing goods directly from suppliers, and managing the entire sales process, is a crucial component of its overall business model. Analysts estimate that the tariffs could result in a $50 to $100 billion reduction in Amazon's annualized EBIT (earnings before interest and taxes). The final impact will depend on various factors, including the extent of cost increases due to tariffs, the magnitude of price hikes, and changes in demand. Amazon has historically shown resilience in managing cost increases, as evidenced by its stable profit margins during the 2018-2019 tariff period under the Trump administration.

Apple, another major player in the tech industry, is also expected to be affected by the tariffs. The company produces over 200 million iPhones annually, none of which are assembled in the U.S. In response to the tariffs, Apple has been diversifying its supply chain by shifting production to countries like India and Vietnam. However, the latest round of tariffs includes nearly all of Apple's production bases, potentially increasing the import cost of each iPhone by $120 to $420, or 15% to 26% of its selling price. If Apple chooses to pass on the entire cost increase to consumers, the price of iPhones could rise by 30% to 40%. For example, the iPhone 16, currently priced at $799, could see its price increase to $1,142, while the iPhone 16 Pro Max 1TB version, priced at $1,599, could reach nearly $2,300.

Nintendo has hinted at potential price increases for its upcoming Switch 2 console due to the impact of U.S. tariffs. The company's U.S. president, Doug Bowser, acknowledged that the pricing strategy for the Switch 2 did not account for the tariff changes. Nintendo's main production base for the Switch is in China, with additional manufacturing in Vietnam. The high price point of the Switch has already drawn criticism from some consumers, and further price increases could dampen demand. Analysts suggest that Nintendo may need to absorb some of the tariff costs to maintain competitiveness, but this could impact the company's profitability. The Switch 2 has been in high demand, with pre-order services remaining popular despite the potential price hikes.