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.

This comes as BMW along with other European carmakers are bracing for impact from US President Donald Trump’s planned tariffs on vehicles imported to the US.