Trump's tariffs have resulted in automakers incurring over $35 million in expenses to date

Impact of U.S. Tariffs on the Automotive Industry

Since 2025, automakers have collectively incurred over $35.4 billion in tariff-related expenses, as revealed by an Automotive News review of financial statements up to mid-March.

Major Automakers Facing Significant Tariff Costs

• Toyota is projected to pay the highest amount, with estimated tariff expenses reaching ¥1.45 trillion (approximately $9.1 billion) for its fiscal year ending March 31.
• GM, Ford, and Stellantis—the Detroit Three—together absorbed $6.5 billion in tariffs in 2025.
• Other manufacturers including BMW, Honda, Hyundai-Kia, Mazda, Mercedes-Benz, Nissan, Subaru, and Volkswagen each reported or anticipated costs exceeding $1 billion.

Tariff Structures and Their Effects

The degree of tariff exposure varies widely among automakers, influenced by the proportion of U.S. sales sourced from overseas factories and the origin of parts used in domestic assembly. Vehicles imported from the European Union, Japan, and South Korea are subject to a 15% duty. Canadian and Mexican vehicles that comply with North American free trade rules face a 25% tariff on the portion of their value not produced in the U.S. Imports of steel and aluminum are taxed at a rate of 50%.

Automakers' Response to Tariff Costs

According to Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions, most manufacturers initially chose not to pass these added costs onto consumers, betting that the tariffs would be temporary. Fiorani explained to Automotive News that increasing prices in response to what was expected to be a short-term issue did not seem practical in a highly competitive market, so many companies absorbed the costs themselves.

Rising Prices and Market Adjustments

Despite these efforts, price hikes have started to emerge. A study by Catalyst IQ, referenced by Automotive News, showed that between the third quarter of 2025 and February 2026, prices for vehicles built abroad—including those from Canada, Japan, Germany, and Mexico—rose more sharply than those for U.S.-made models.

Production Shifts and Model Changes

• GM intends to move production of its next-generation Buick crossover from China to Kansas by 2028.
• Dodge removed the Hornet from its lineup in January, citing policy changes as a key factor.
• Volkswagen decided against launching its ID Buzz minivan in the U.S. for the 2026 model year, with tariffs being one of the reasons.

Uncertainty Surrounding Tariff Policies

Dan Hearsch, global co-leader of automotive and industrial practice at AlixPartners, noted that automakers remain unsure which tariffs will be permanent. He told Automotive News that the administration has not provided clear or consistent guidance regarding which duties will remain, increase, decrease, or be introduced.

Additional Industry Challenges

The financial strain from tariffs adds to the automotive sector's ongoing difficulties with EV profitability.