“And now the tariffs are bitter.” A phrase heard repeatedly in recent weeks to describe the uncertain global economic context triggered by the tariffs imposed by Donald Trump, the current President of the United States, whose financial decisions have ignited a trade war affecting everyone, no exceptions.
Tariffs with sky-high rates have already started to impact both foreign markets and domestic production, as seen in the recent case of Haas Automation, which reported a significant drop in demand for its machinery on international markets due to rising costs, with estimated losses of around five million per month.
However, despite the uncertainty faced by the parent company, the Haas F1 Team has emphasized that what is happening at Haas Automation will have no impact on the team led by Ayao Komatsu.
In early April, the Trump administration imposed higher tariffs on 57 countries, before suspending them for 90 days—except for China—following the start of negotiations and, more importantly, market reactions. Still, there is uncertainty about what will happen at the end of the suspension period, with talks ongoing about possible exemptions for car manufacturers, though only for imported goods.
It’s a complex situation that inevitably shifts focus to Formula 1, in an attempt to understand what impact tariffs could have on the series. As this trade war is only just beginning, its long-term impact remains unclear, but some teams—like Williams—have already adopted preventive strategies.
The areas where changes are most felt
The biggest revenue sources for a team come from sponsors and the prize money distributed by FOM based on the final constructors’ championship standings, along with secondary income linked to a team’s prominence in the series. That’s why the constructors’ title is significant both for financials and team strategies.
“Fundamentally, for a team, much of the revenue comes first from sponsors or our partners. For now, the dollar is still low, so you try to hedge a bit. Some of the drivers are paid in dollars, others in euros, for example. Some partner revenues are in dollars, some in euros, others in pounds,” explained James Vowles, Williams TP, during the GP weekend in Jeddah.
“You can hedge by structuring contracts differently. I don’t know what other teams do. This is just a smart way of managing things on our side. For us, one of the main sources is the FOM prize money, which is in dollars. There has been some impact, definitely, but it doesn’t worry me particularly.”
For now, limited impact on teams
Vowles explained that Williams has not considered drastic measures following the announcement of the new tariffs: revenues and expenses are spread across different currencies, offering some flexibility, while equipment comes from various parts of the world.
“One of Williams’ advantages is that we’re really independent, and our holding company, Dorilton Capital, is truly international in terms of income streams from around the world. We don’t rely on a specific financial structure, which is very helpful for us. We’ve discussed it internally, and there’s no major impact—neither from the tariffs nor from the dollar’s value. The numbers are small. They don’t help, but they’re small for us.”
The conversation broadens when considering the consequences tariffs could have on the automotive market. It’s no coincidence that, in a recent interview with Motorsport.com, Stefano Domenicali emphasized how F1 must recognize that major automotive brands could be forced to make difficult choices in the event of an industry crisis. A crisis not only tied to tariffs, but also to the slowing transition toward electric vehicles.
“For us, the numbers are small, but I think the major manufacturers are more affected, because there’s a lot of turbulence right now—even in terms of who buys products, where they buy them, and how much it costs to buy them globally,” Vowles added.
Focus is more on the automotive market than F1
This sentiment is shared by Christian Horner, Red Bull TP. Among the major manufacturers is Mercedes, whose TP Toto Wolff stated that they are monitoring the global situation, while reiterating the brand’s long-term commitment to F1.
“My background is in finance, and that’s why I’m watching the situation. What’s happening, what’s unfolding globally before our eyes, is almost like a socio-economic experiment,” Wolff said in Saudi Arabia.
“There’s definitely a sense of concern from some of our partners in the United States, because they don’t know what all of this means for their business—how the tariffs and geopolitical situation will affect their operations in the future.”
“So far, it hasn’t hit us directly. We have a fantastic group of partners with Mercedes who fully support F1. It’s a very dynamic situation regarding automotive tariffs, but we also have significant production in the USA, which is a positive factor in these circumstances.”
Also speaking in Saudi Arabia, Ferrari TP Frédéric Vasseur emphasized that teams are already taking steps to anticipate the consequences. Ferrari has U.S.-based sponsors, including main partner HP, even though recent technological tariffs have been revised to favor companies that manufacture abroad.
“We certainly have U.S. sponsors, but also many suppliers from the United States, sometimes buying raw materials from China. This is definitely creating some level of uncertainty for the future. But we’re having open discussions with them and trying to anticipate every single issue. But yes, it can be a tricky situation,” Fred Vasseur explained.
What COVID taught about supply chains
The past five years have taught F1 a lot, starting with the global pandemic, which had a major impact on the world economy, pushing teams to diversify suppliers to avoid being stuck due to dependence on a single market.
“The amount of equipment supplied from the United States isn’t as much as you’d think. Raw materials come from all over the world, and we hedge specifically for that,” James Vowles added. For example, part of the carbon fiber used in Formula 1 comes from Japan, a country already considering measures on tariffs.
“I think COVID taught us one thing: make sure you have suppliers located all over the world, because you never know what could happen. You stockpile as much as you can, but in the end, you can only hold things up for so long.”
“But we’re already at the limit of what we feel comfortable doing, because the budget cap prevents us from buying six years’ worth of materials. You have to be careful not to overload one season at the expense of the future.”
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