Three major companies will suffer from Trump’s auto tariffs; Tesla is the big winner.
Detroit’s Big Three Automakers to Suffer Under Trump’s 25% Tariffs, While Tesla and Rivian Gain an Advantage
New financial analyst reports highlight that Detroit’s three major automakers will suffer the consequences following President Trump’s imposition of 25% tariffs on all foreign-made cars and auto parts. Meanwhile, Elon Musk’s Tesla and Rivian are expected to gain an advantage over their rivals.
The U.S. automotive industry has experienced remarkable growth in recent years. According to official data, new vehicle sales reached approximately 15.5 million units, representing a 13% increase compared to the previous year.
The Three Automakers That Will Suffer
Both GM and Ford have significant international exposure in their supply chains and could face a 30% drop in earnings before interest and taxes (EBIT), a key profitability indicator, according to analysts at the research firm Bernstein.
Additionally, Stellantis, which owns Jeep and Chrysler, is better positioned than its Detroit-based rivals due to its higher U.S. content in Mexican production. These vehicles will be exempt from the tariffs set to take effect on April 2.
Tesla, the Big Winner
Meanwhile, Tesla manufactures all the electric vehicles it sells in the U.S. at plants in California and Texas. This key factor should protect Musk’s pioneering company from the most severe consequences of the tariffs. Its electric vehicle competitor, Rivian, also manufactures all its vehicles in the U.S.
“Tesla is the clear structural winner: localized, with a strong market share and better protected from trade risks,” analysts added. “For everyone else, this represents a margin reset and a real drag on short-term profit generation.”
On Thursday, Tesla’s shares rose 0.4%, while Rivian’s surged more than 7%. GM shares plummeted by 7.4%, Ford dropped 4%, and Stellantis fell 4.2%.
Foreign Automakers to Be Hit Hardest
Foreign automakers are expected to be the most affected. Swedish company Volvo manufactures only 13% of the vehicles it sells in the U.S. within the country, according to data compiled by Wards Automotive and Barclays, as reported by Axios.
Japanese automaker Mazda (19%), German Volkswagen (21%), and South Korean Hyundai (33%) will also be impacted by import tariffs. Mercedes, BMW, and Toyota manufacture less than 50% of the vehicles they sell in the U.S. within the country.
Overall, Bernstein estimates that the tariffs will result in “up to $110 billion in annual tariff costs” for automakers, forcing manufacturers to absorb the higher costs or pass them on to consumers.
Vehicle prices are projected to increase by an average of $3,700, according to the firm’s estimates. Morgan Stanley analyst Adam Jonas estimated even higher costs, at nearly $6,000 per vehicle.
Italy-based Ferrari announced that it would raise prices on some models by 10% in response to the tariffs. Some analysts noted that its high-income clientele is unlikely to be deterred by the price increases. The company’s U.S.-listed shares rose 3%.
The White House stated that it expects the tariffs to generate $100 billion in annual tax revenue, in addition to boosting domestic manufacturing by incentivizing companies to build more plants in the U.S.
Certain auto parts that comply with the United States-Mexico-Canada Agreement (USMCA) will “remain tariff-free” while the Department of Commerce calculates tariffs on their non-U.S. content.
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