Friday, August 08, 2025 1:34:01 PM
Trump's tariffs are pummeling top automakers. The hit is $11.7 billion — and climbing
The auto sector is taking trump's tariffs on the chin. Toyota (TM), the world's largest automaker, was the latest to reveal the impact it's seeing from tariffs in its earnings on Thursday morning, with slightly over $3 billion wiped from its fiscal Q1 (June 30) operating income.
With Toyota's results in, the cumulative tariff hit from the largest automakers following the end of the June quarter stands at around $11.7 billion, per automakers' financial disclosures. Toyota had the largest exposure, followed by rivals like Volkswagen (VWAGY), GM (GM), Ford (F), Honda (HMC), and others. China's top automakers were excluded from the list as they do not operate in the US.
Automakers, including Toyota and Honda, are not only seeing imports from their home market of Japan hit with tariffs (15%). They're also dealing with higher overall auto sector tariffs of 25% impacting operations from countries like Canada and Mexico. This also goes for the Big Three — Ford, GM, and Stellantis — which have significant operations with US-Mexico-Canada Agreement (USMCA) partners.
Even Tesla (TSLA), which makes all of its vehicles in the US, had a significant tariff impact from duties on auto parts like batteries for EVs.
"The cost of tariffs increased around $300 million with approximately two-thirds of that impact in automotive and less in energy. However, given the latency in manufacturing and sales, the full impacts will come through in the following quarters," Tesla CFO Vaibhav Taneja said on the company's earnings call on July 23.
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"Investment for new assembly plants is considerable and requires a larger rationale than a one-term presidential administration," AutoForecast Solutions auto manufacturing expert Sam Fiorani said. "Building a new factory requires three to five years of planning and, likely, one or two billion in investments. Even retooling an existing facility will need around half a billion dollars."
Fiorani noted that the financial outlays for factory spending have to be weighed against the cost of paying tariffs over the next three years.
Even Tesla is looking to onshore some of its parts production. Tesla vice president of engineering Lars Moravy said during the Q2 earnings call that Tesla's use of LFP batteries from China was a major source of tariffs, and that the company's first LFP battery factory would be coming online by the end of the year to defray some of those costs.
The other alternative to evading the margin-eating costs of tariffs would be to pass those costs to buyers.
"In the short term, automakers did carry the costs and it showed up in the second quarter financial reports," Fiorani said, adding that at some point, something has to give, with prices rising.
"While it will vary depending on the profit margin on luxury models versus the need to be price competitive on the lower end, consumers of all vehicles, imported or not, will find prices going up starting this fall and increasing more next year."
https://finance.yahoo.com/news/trumps-tariffs-are-pummeling-top-automakers-the-hit-is-117-billion--and-climbing-113018599.html
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The auto sector is taking trump's tariffs on the chin. Toyota (TM), the world's largest automaker, was the latest to reveal the impact it's seeing from tariffs in its earnings on Thursday morning, with slightly over $3 billion wiped from its fiscal Q1 (June 30) operating income.
With Toyota's results in, the cumulative tariff hit from the largest automakers following the end of the June quarter stands at around $11.7 billion, per automakers' financial disclosures. Toyota had the largest exposure, followed by rivals like Volkswagen (VWAGY), GM (GM), Ford (F), Honda (HMC), and others. China's top automakers were excluded from the list as they do not operate in the US.
Automakers, including Toyota and Honda, are not only seeing imports from their home market of Japan hit with tariffs (15%). They're also dealing with higher overall auto sector tariffs of 25% impacting operations from countries like Canada and Mexico. This also goes for the Big Three — Ford, GM, and Stellantis — which have significant operations with US-Mexico-Canada Agreement (USMCA) partners.
Even Tesla (TSLA), which makes all of its vehicles in the US, had a significant tariff impact from duties on auto parts like batteries for EVs.
"The cost of tariffs increased around $300 million with approximately two-thirds of that impact in automotive and less in energy. However, given the latency in manufacturing and sales, the full impacts will come through in the following quarters," Tesla CFO Vaibhav Taneja said on the company's earnings call on July 23.
.png)
"Investment for new assembly plants is considerable and requires a larger rationale than a one-term presidential administration," AutoForecast Solutions auto manufacturing expert Sam Fiorani said. "Building a new factory requires three to five years of planning and, likely, one or two billion in investments. Even retooling an existing facility will need around half a billion dollars."
Fiorani noted that the financial outlays for factory spending have to be weighed against the cost of paying tariffs over the next three years.
Even Tesla is looking to onshore some of its parts production. Tesla vice president of engineering Lars Moravy said during the Q2 earnings call that Tesla's use of LFP batteries from China was a major source of tariffs, and that the company's first LFP battery factory would be coming online by the end of the year to defray some of those costs.
The other alternative to evading the margin-eating costs of tariffs would be to pass those costs to buyers.
"In the short term, automakers did carry the costs and it showed up in the second quarter financial reports," Fiorani said, adding that at some point, something has to give, with prices rising.
"While it will vary depending on the profit margin on luxury models versus the need to be price competitive on the lower end, consumers of all vehicles, imported or not, will find prices going up starting this fall and increasing more next year."
https://finance.yahoo.com/news/trumps-tariffs-are-pummeling-top-automakers-the-hit-is-117-billion--and-climbing-113018599.html
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