Formula 1 will be bracing for the potential impacts of US President Donald Trump’s recently announced tariffs, according to industry expert Mark Gallagher.
With global markets faltering and issues already arising from the new tariffs introduced last week - though Trump announced on Wednesday there will be a 90-day pause on higher tariffs for dozens of countries - F1 is almost certainly going to feel the squeeze in certain areas.
The Japanese Grand Prix was the first race weekend since the new measures were announced and it was clear an impact should be expected. But how it affects the series remains largely unknown at the moment.
The automotive industry as a whole will undoubtedly be hit by the tariffs, some of which were put in place largely because of what Trump and his team believed was an unfair system when it came to importing and exporting cars and car components.
Mark Gallagher, who worked as marketing director at Jordan and head of commercial affairs at Red Bull and is now the CEO of Performance Insights, offered his expert opinion on how teams could be caught up in the sweeping tariff pledges.
“It's still early days and it remains to be seen what impact this is going to have on Formula 1,” he told the James Allen on F1 podcast.
“When you look at the car manufacturers in Formula 1, Mercedes-Benz sold 325,000 vehicles in the United States last year. Mercedes sold about 2 million cars last year, about 2.5m or 2.6m vehicles in total. So that's a reasonable proportion of Mercedes sales.
“But then when you look at Ferrari and you look at McLaren, you then start to see a seismic change. So 46% of all McLaren... wholesale sales were in North America, and most of it was in the United States, not Canada.
“I think there's a really interesting challenge there. About 25% of all the cars that come out of Maranello end up in the United States, with California alone as one of the biggest markets for Ferrari.
“So the potential impact on this is really, really significant for all the manufacturers in Formula 1, albeit with one glaring exception, which is Renault. Renault pulled out of the United States market in 1987 with the Renault brand, and they don't plan to bring Alpine into the market until 2027. So, you know, Renault is kind of a bit of a standout one.
“But for the other manufacturers, this is a major, major challenge at the present time. And that also includes General Motors, who, of course, as you know, are coming into Formula 1 with a new Cadillac team.”
Haas is the only American-based team already on the grid but, although Haas Automation has released a statement in reaction to the tariffs, Autosport understands that as things stand the F1 outfit expects to be unaffected.
“Haas Automation is in the process of studying the full impact of tariffs on our operations,” it read.
“In recent days, we’ve seen a dramatic decrease in demand for our machine tools from both domestic and foreign customers. Out of caution, we have reduced production and eliminated overtime at our sole manufacturing plant in Oxnard, California, where we employ 1700 workers and have been in operation since 1983. We have also halted hiring and put new employment requisitions on hold.
“While tariffs will have a significant impact on Haas Automation’s business, we’re optimistic that the Trump Administration will come up with the solutions to provide relief for US manufacturers – solutions that will allow us to continue manufacturing Haas CNC machines in the US, while employing thousands of workers at our factory in Oxnard and indirectly at Haas Factory Outlets across America.
“Haas Automation is particularly concerned about the potential reduction of tariffs on machine tools from certain countries, such as Japan, Taiwan and Korea, without a corresponding reduction in tariff rates for imported raw materials and components into the US. Such a scenario would be catastrophic to the $5 billion US machine tool industry, which is a key component of US national security.
“Machine tools are essential to the entire manufacturing infrastructure in the US. We expect the Trump Administration to follow through on its promise to protect American manufacturing by supporting the US machine tool industry, specifically (1) tariff exemptions for raw materials and components vital to the US machine tool industry, and (2) maintaining tariffs for imported machine tools.”
As well as a potential impact on teams internally, the possibility of partners and sponsors having to consider tightening their purse strings over the next few uncertain months could also lead to issues further down the line.
“We just did an analysis of all the sponsors in Formula 1, [as well as] of the teams and of the world championship and of the individual races,” added Gallagher.
“The American influence of Formula 1 is everywhere to see, either because the decisions are being made in the United States in the first place, or because the United States represents such an important market for companies.
“I'm talking about companies like LVMH, which have just announced a 10-year deal in Formula 1. So the reality is this is going to have an effect, certainly in the short term - and I'm going to put a bracket around that - and I think the next three to six months, as we see what pans out from this Trump era decision on tariffs.
“If the uncertainty and nervousness continue through to the summer, and God forbid into the autumn, you could see this really starting to have a significant impact on negotiations over the 2026 season.
“There's no question, when you take a step back, that uncertainty over the United States' relationship with the rest of the world and the economic impact of these Trump administration tariffs are really, really significant.”
F1, and motorsport in general, has had to roll with some punches over the years but Gallagher believes owner Liberty Media does not have reason to panic just yet.
“It will affect Formula 1, be it the car manufacturers, be it the sponsors here in the sport, or quite frankly, just be it the overall economic impact globally,” he explained.
“We in Formula 1 have suffered some pretty seismic challenges over the last 20 years. Think about the ban on tobacco sponsorship in the European Union, the financial crisis of 2008, not to mention the global pandemic.
“If you go back to the last big financial crisis, that led to the withdrawal of Honda, Toyota and BMW. And of course, that was only a couple of years after Ford had abandoned Formula 1. So we've seen massive challenges before.
“Liberty Media and of course the shareholders there, they'll be following what's happening on Wall Street very, very carefully.
“It's listed on the New York Stock Exchange. It has three major events in the United States…the view is that the next few weeks are going to be a fascinating roller coaster while the Trump administration and world leaders try and figure out this new world order. Business needs to just stay calm.”
