I don’t think Volkswagen will ship models from Mexico to Europe and then USA. I think the mostly likely and legal scenario is producing in Europe for the USA market. For instance, the Taos produced in Argentina for the South America region could be diverted to USA while that produced at Puebla plant in Mexico is taken to South America. I also expect the no tariff on distribution costs to largely offset the shipping costs difference. I think the other main headwind will come from adapting the plants in Europe to produce models specifically sold in USA such as Jetta which is currently made in Mexico.
I have considered various scenarios here such as possibility of automakers to agree with the US government not to pay tariff as they build plants in the country, possibility of the EU to come up with measures to appease Trump, possibility of offsetting the tariff headwind through price increases and possibility of a reduced tariff rate. I arrive at an headwind of $2.91 billion under these scenarios.