The New Rules of the Road: How Tariffs Are Redrawing the Map of Truck Manufacturing Profitability

The U.S. automotive tariffs of 2025 are not just a tax on imports—they are a seismic shift in global manufacturing strategy. With a 25% levy now applied to trucks and automotive components, automakers are scrambling to reengineer supply chains, localize production, and hedge against a new era of trade volatility. The ripple effects are already visible: Daimler recently slashed its 2025 profit forecast, citing “unprecedented cost pressures from U.S. trade policies.” This is no isolated incident. The truck manufacturing sector is at an inflection point—one where the ability to navigate tariffs will separate winners from losers.

The Daimler Dilemma: A Warning Shot Across the Sector

Daimler’s profit cut signals a broader vulnerability in automotive supply chains. The German giant, which derives nearly 20% of its truck sales from North America, now faces a stark choice: absorb tariffs (and watch margins evaporate) or shift production to U.S.-Mexico-Canada Agreement (USMCA) compliant facilities. The latter requires a costly pivot to regional suppliers, as even parts like engines and transmissions must now meet a 75% North American content threshold to avoid tariffs.

But Daimler isn’t alone. reveals a sector in turmoil. General Motors, which has already begun relocating production of its Silverado/Sierra trucks to U.S. plants, is still bracing for a $4–5 billion annual tariff hit. The message is clear: companies that fail to localize fast enough risk becoming collateral damage in this trade war.

The Ripple Effect: Competitors and Suppliers Under Pressure

The tariffs are creating a domino effect. Foreign automakers like Toyota and Honda, which rely on Mexico-based assembly for trucks, are now racing to retool U.S. factories or risk 25% duties on every vehicle. Suppliers aren’t immune either. BorgWarner, a key supplier of transmissions and electrified powertrains, warned investors in April that tariff-driven cost inflation could reduce its 2025 earnings by 10–15%.

Meanwhile, the “chicken tax”—a preexisting 25% tariff on light truck imports—has been amplified by the new rules. This is squeezing electric vehicle (EV) makers disproportionately. Tesla, for instance, is already facing lithium-ion battery cost spikes of up to 125% due to antidumping duties on Chinese graphite. The result? A gap that could widen unless the company accelerates domestic sourcing.

Investment Themes: Where to Play the Tariff Landscape

This isn’t just a risk—it’s an opportunity. Here’s how investors can capitalize:

1. Localization Leaders

Companies already embedded in U.S. manufacturing ecosystems are poised to gain share. PACCAR, the maker of Kenworth and Peterbilt trucks, has a head start: 95% of its North American trucks are produced domestically. This insulates it from tariffs while positioning it to capture demand from competitors forced to raise prices.

2. Tariff Hedging Specialists

Look for firms leveraging USMCA loopholes. Cummins, a diesel engine giant, is expanding its U.S. factories to qualify for the “import adjustment offset,” which reduces tariff burdens by 3.75% in 2025. This offsets costs for manufacturers using U.S.-assembled vehicles, making Cummins a critical partner for automakers like Ford and GM.

3. The Electric Truck Play

While EVs face battery cost pressures, they’re also the sector least tied to legacy supply chains. Nikola Corporation, which designs hydrogen fuel cell trucks, could thrive as companies seek alternatives to diesel engines. Its partnership with Bosch for localized production in Arizona offers a tariff-proof model.

4. Short the Laggards

Daimler’s stock (DAI.DE) has already fallen 18% year-to-date, but the pain may deepen. Similarly, Navistar International, reliant on Mexico-sourced components, faces a liquidity crunch if it can’t restructure quickly.

The Bottom Line: Adapt or Perish

The tariffs aren’t going away. The Biden administration’s May 2025 proclamation extended these measures under Section 232, and global trade tensions show no sign of easing. Investors must ask: Is a company’s supply chain agile enough to localize? Does it have partnerships to hedge against tariff spikes? And is it pivoting to segments—like electric or hydrogen trucks—that can command premium pricing?

The trucks that dominate this new landscape will be those built not just on steel and rubber, but on strategic foresight. For investors, the time to act is now—before the road to profitability becomes even bumpier.

Andrew Ross Sorkin is a pseudonym. Actual analysis based on market data.