The automotive sector is facing significant turbulence following President Donald Trump’s recent announcement of substantial import tariffs. This decision introduces considerable uncertainty and potential financial strain for several major players in the industry, while potentially offering a relative advantage to others based on their manufacturing footprint.
Major US Automakers Face Profit Warnings
President Trump confirmed this Wednesday the implementation of a 25% tariff on all vehicles imported into the United States, a measure that also encompasses key automotive components. This move has surpassed the most pessimistic forecasts circulating on Wall Street. The consequences are expected to be severe, particularly for manufacturers heavily reliant on supply chains involving Canada, Mexico, Europe, and Asia, despite minor concessions for North American vehicles with significant US content.
Analysts at UBS have projected that these new tariffs could potentially eliminate the annual profits for both General Motors (GM) and Ford (F) entirely. The impact extends to automotive suppliers as well, who might see their profits decrease by an estimated 30% to 40%. Concerns about the material risk to revenues have led some financial institutions to reassess their outlook on these companies.
Domestic Production Offers Relative Shield
Tesla (TSLA) appears relatively better positioned as it manufactures all its vehicles within the United States, although it’s acknowledged that some of its components could still be affected by the tariffs on parts.
The level of domestic production varies significantly among automakers selling in the US market:
| Manufacturer | Approx. US Local Production % |
| Ford | 80% |
| General Motors | 55% |
| Toyota | 40-50% |
| BMW | 40-50% |
| Mercedes-Benz | 40-50% |
This difference in reliance on domestic manufacturing highlights the varied exposure companies have to the new import duties.
Market Reacts Sharply, Foreign Automakers Also Hit
The stock market responded swiftly and negatively to the tariff news. Ford’s shares decreased by 3.9%, while GM experienced a more significant drop of 7.3%. Stellantis (STLA) saw its shares fall by 1.3%.
Foreign automakers were not immune to the downturn:
- Hyundai shares fell by 4.3%
- Honda (HMC) shares declined by 2.5%
- BMW shares dropped by 2.6%
- Mercedes-Benz shares decreased by 2.7%
Interestingly, the United Auto Workers (UAW) union expressed support for the President’s decision.
“It is a step in the right direction for workers”
Stated Shawn Fain.
Economic Uncertainty and Strategic Shifts
A key factor determining the ultimate economic effect will be the extent to which manufacturers can pass these increased costs onto consumers. As a potential mitigating measure, President Trump announced that interest paid on loans for cars manufactured in the U.S. would become tax-deductible.
Analysts at Deutsche Bank interpret these tariffs not merely as a short-term negotiating tactic within unstable trade relations, but as potentially indicating a deeper, structural shift towards industrial reshoring and localization of supply chains.
Maxwell Reed is the first editor of Cryptovista360. He loves technology and finance, which led him to crypto. With a background in computer science and journalism, he simplifies digital currency complexities with storytelling and humor. Maxwell began following crypto early, staying updated with blockchain trends. He enjoys coffee, exploring tech, and discussing finance’s future. His motto: “Stay curious and keep learning.” Enjoy the journey with us!