Volkswagen Group has confirmed it will maintain its plants in Mexico despite US President Donald Trump's threat to impose 25 per cent tariffs on trading partners Canada and Mexico, Europa Press reported.

The American auto industry is working out how to adjust supply chains if the trade war continues, a potentially expensive prospect.

Volkswagen is working on back-up plans for how its passenger car brand could tackle U.S. tariffs on imports from Mexico, while BMW is preparing to absorb the cost, as the auto industry reels from U.S.

According to a new report from CNBC, the makers of the Ultimate Driving Machine said that if the USMCA guidelines remain for tariff guidelines, its imports will be subject to levi