Tariff Analysis Shows How Much Money U.S. Auto Industry Could Lose originally appeared on Autoblog.
The U.S. auto industry’s bill under a 25% uniform tariff rate is eye-watering
The Center for Automotive Research (CAR) has released a new analysis projecting the impact of a uniform 25% tariff on imported parts and light vehicles on the U.S. auto industry in 2025, with the total figure for all manufacturers exceeding $100 billion. CAR’s study estimates an increased cost of $107.7 billion to all automakers, and $41.9 billion for Detroit’s “Big Three” manufacturers, Ford, Stellantis, and General Motors (GM). A uniform 25% tariff would also impact an estimated production volume of 6.8 million vehicles. Dr. K. Venkatesh Prasad, Senior Vice President of Research and Chief Innovation Officer at CAR, said in a release: “The modern automotive supply chain is both global and complex, convoluting the seemingly simple question of the cost of 25% tariffs on the industry.” Dr. Prasad added: “Automakers and their suppliers are often multinational companies with facilities spread out across the world, making it difficult to discern how much of a vehicle is domestically produced.”
CAR’s study used top-down and bottom-up approaches to form its findings. In other words, it evaluated big-picture trade data and combined this with details for individual vehicle models. The top-down approach included using 2024 U.S. trade data and applying key assumptions to estimate light vehicle and original equipment manufacturer (OEM) shares of auto parts imports. In contrast, the bottom-up approach used Model Year 2025 American Automobile Labeling Act (AALA) Part 583 data, since this data requires automakers to disclose specific details about a vehicle’s parts and assembly origins. The study also acknowledges that the accuracy of its estimated figures relies on the data’s stated assumptions, whereas U.S. tariffs on automotive parts and light vehicle imports are subject to policy changes.
Some key U.S. trade partners avoided the 25% tariff, but one country isn’t done negotiating
Countries such as the U.K., South Korea, Vietnam, Indonesia, Japan, the Philippines, Thailand, Cambodia, and the European Union have negotiated U.S. trade deals before President Trump’s August 1 deadline to avoid 25% higher or steeper tariffs on products, including automotive exports. The U.K., South Korea, Japan, and the European Union’s automotive exports are more significant than those of the other listed countries, and the U.K. was the first to strike a deal with the first 100,000 annually exported vehicles facing a 10% tariff. South Korea, Japan, and the European Union will be subject to a 15% tariff rate on automotive exports. However, Japanese Prime Minister Shigeru Ishiba said on Monday that he would have “absolutely no hesitation” to speak with President Trump about implementing a cut to this 15% rate soon, Reuters reports. Additionally, there’s no clear timeline for when tariffs on countries that have made a U.S. trade deal will decrease from their original 25% figure.
Final thoughts
While GM, Stellantis, and Ford revised their 2025 financial outlooks to include estimated tariff impacts of around $10 billion, which is significantly lower than the CAR study’s projected $41.9 billion, CAR’s analysis is based on a uniform 25% tariff rate. However, this 25% figure is especially relevant right now, given that several U.S. foreign trade partners have reached a revised tariff deal but are unsure when the lower rates will take effect. The Detroit Big Three automakers’ updated financial guidance takes into account factors such as real-world interest rates, mitigation efforts, and company-specific factors. For example, Ford said that it expects to offset $1 billion of its 2025 tariff impact.
Tariff Analysis Shows How Much Money U.S. Auto Industry Could Lose first appeared on Autoblog on Aug 5, 2025
This story was originally reported by Autoblog on Aug 5, 2025, where it first appeared.
Comments