Global automakers are bracing for a $30 billion blow to their 2025 operating profitability due to U.S. tariffs, according to a Moody's Ratings report. The analysis highlights that tariffs will erode profit margins by 100-150 basis points, equivalent to over one-fifth of the operating profits generated in 2024 . The impact spans a range of trade agreements, including the EU-U.S. and Japan-U.S. frameworks, but uncertainty persists in negotiations with Canada, Mexico, and South Korea .
The report underscores that automakers are already implementing short-term strategies to offset the costs, such as reducing vehicle amenities and raising prices. However, long-term solutions like localized production and supply chain reconfiguration require significant investments and time.
, for instance, has committed $4 billion to expand U.S. manufacturing, while faces rising costs from tariffs on EV parts despite its domestic production .The tariff-driven losses come amid a broader reshaping of the automotive industry. J.P. Morgan Global Research estimates that combined tariffs on vehicles and parts will total $41 billion in the first year, rising to $52 billion by year three . Automakers and consumers are expected to share the burden, with new vehicle prices projected to rise by 3% annually. This aligns with recent actions by manufacturers like Hyundai, which plans a 1% U.S. price increase for new models, and Porsche, which has already implemented incremental price hikes .
The ripple effects extend beyond financial metrics. The U.S.-China trade war, which includes a 100% tariff on Chinese EVs, has forced companies like BYD to pivot to markets in Latin America and Africa. Meanwhile, European automakers like Volkswagen and BMW face margin pressures as they navigate both tariffs and the transition to electric vehicles .
The industry's response has been multifaceted. Companies are accelerating reshoring efforts, with
shifting production of the Civic Hybrid and CR-V from Japan and Canada to the U.S. . Polestar, once reliant on Chinese manufacturing, is now pivoting to South Korea and the U.S. to avoid tariffs. However, these adjustments come at a cost. reported a €300 million tariff-related loss in 2025's first half, while General Motors warned of a $4-5 billion annual hit from tariffs .Political developments could further complicate the landscape. President Trump is considering tariff relief for U.S. automakers, including extending a 3.75% import adjustment offset for five years . Conversely, retaliatory measures from Canada and the EU threaten to deepen the crisis, with Canada imposing 25% tariffs on non-USMCA-compliant vehicles .
Source: [1] Automakers to take $30B tariff hit to profits: Moody's (https://finance.yahoo.com/news/automakers-to-take-30b-tariff-hit-to-profits-moodys-160923140.html)
[2] Trump tariffs take $30B bite of automakers' profits (https://www.eenews.net/articles/trump-tariffs-take-30b-bite-of-automakers-profits/)
[3] $30B Auto Profit Hit from US Tariffs | Moody's 2025 Forecast (https://www.indexbox.io/blog/us-tariffs-to-slash-automaker-profits-by-30-billion-in-2025-moodys-reports/)
[6] Auto Tariffs: Who Will Pay? | J.P. Morgan Global Research (https://www.jpmorgan.com/insights/global-research/autos/auto-tariffs)
[7] The New Auto Manufacturing Order: Tariffs U.S. vs. China (https://autoraiders.com/2025/09/05/the-new-auto-manufacturing-order-tariffs-u-s-vs-china/)
[11] Exclusive: Trump considering significant tariff relief for US vehicle ... (https://www.reuters.com/business/autos-transportation/trump-considering-significant-tariff-relief-us-vehicle-production-senator-says-2025-10-03/)
[12] US Tariffs Upend Automotive Manufacturing: ... (https://www.automotivemanufacturingsolutions.com/editors-pick/washingtons-tariff-gambit-upends-vehicle-production-map/646145)
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