On August 19, 2025, the U.S. Commerce Department extended steel and aluminum tariffs by 50 % to 407 new product categories. Among these newly added categories are imported parts for automotive exhaust systems and electrical steel essential for electric vehicle components.
These include exhaust components used in internal combustion models as well as key EV metal inputs—things like stator steel in EV motors and electrical steel for batteries. For a plant like Spartanburg, which relies on global sourcing for both traditional and electrified vehicles, these new duties will translate directly into cost hikes.
BMW Margin Pressure: Already Being Felt
BMW has already flagged the impact of tariffs. In its automotive segment, the company expects tariff-related pressure of around 1.25 percentage points on profit margin for 2025, with 1.5 points already felt in the first half.
Spartanburg’s Advantages—And Limits
There is a silver lining: Spartanburg operates within a U.S. free-trade zone, meaning parts imported for vehicles destined for export might evade these tariffs. The plant has even considered adding shifts to boost output by up to 80,000 units, in part to absorb policy shocks.
Meanwhile, BMW CEO Oliver Zipse remains publicly optimistic, pointing to the plant’s scale and export power as potential leverage. Additionally, BMW is hopeful that a proposed EU-U.S. “netting mechanism”, which would allow exports from the U.S. to offset import tariffs based on value, could help mitigate the damage.
BMW’s Spartanburg, South Carolina facility isn’t just crucial for BMW—it’s monumental. In 2024, it assembled 396,117 Sports Activity Vehicles and Coupes, including over 57,000 plug‑in hybrids (around 14 % of its volume). Nearly 225,000 vehicles were exported, with the total export value exceeding $10 billion—making it the top U.S. automotive exporter by value. Overall, about 63 % of the plant’s production since 2014 has been exported.
Why This Hits Spartanburg Harder Than Before
In prior tariff rounds, BMW weathered domestic steel and aluminum tariffs in the late 2010s. However, the current wave is different because it strikes automotive parts themselves, not just raw materials. That means components crucial to both combustion and electric powertrains—especially EV-specific elements like electrical steel—are now more expensive.
BMW’s $1.7 billion EV expansion in Spartanburg (including battery assembly) now faces a more expensive reality even before EVs roll off the line. And with exports comprising the bulk of plant output, any shift in export competitiveness is consequential.
Bottom Line: Spartanburg has long been BMW’s U.S. flagship—built for exports and progressively leaning into electrification. But Trump’s expanded tariffs now target components at the heart of both its supply chains—not just raw materials. That layer of complexity and exposure comes at a critical juncture, just as BMW seeks to scale EV production from its U.S. base.
BMW’s options are clear: accelerate U.S. localization of EV parts (a multi-year effort), lean on free-trade exemptions for export-bound vehicles, and race for trade accommodations like the EU-U.S. netting mechanism.