Trump’s 25% auto tariffs are in effect. What investors need to know

Ultimately, the rollout of the tariffs on auto parts will be key, and could potentially bring some relief for automakers, depending on their supply chain network.

Parts that are currently compliant with the USMCA trade deal will be tariff-free, but only until the secretary of commerce and Customs and Border Protection establish processes to impose levies on non-U.S. content.

Automakers under USMCA also are expected to have an opportunity to have U.S. content equate to a reduction in their tariff calculation, according to the White House.

Automakers most impacted

S&P Global Mobility reports Volvo, Mazda, and (including Genesis and Kia brands) are the most at risk from a vehicle standpoint, as at least 60% of their respective U.S. sales were imported from outside the U.S. in 2024.

Ford, , , and Chrysler parent produced the most vehicles in the U.S., according to S&P Global Mobility. Those five automakers accounted for 67% of U.S. passenger light-vehicle production in 2024.

But Bernstein estimates 57% of the value content in U.S.-assembled vehicles is imported, which means companies such as Ford — the No. 1 U.S. producer of cars and trucks — are still set to be significantly impacted by the tariffs.

Among the Detroit automakers, Bernstein reports GM faces the highest exposure to tariffs, driven by its more than 80% North America revenue share, 48% vehicle import rate, and less than 40% U.S. parts content in domestic builds.

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Bernstein estimated GMs earnings before interest and taxes could drop 79% as a result of the tariffs, an 81% decline in earnings per share and a $4.1 billion hit to free cash flow.

That compares with Bernsteins estimates for Ford of a 16.5% hit to EBIT, 23% decline in EPS and 36% drop to free cash flow.

Stellantis, Bernstein estimates, is least affected, with only 40% of global revenue from the U.S. and 56% local parts content, resulting in a roughly $1 billion EBIT impact, 8.75% lower net income and a roughly $540 million hit to free cash flow.

Excluding potential tariffs on parts, U.S. electric vehicle leader as well as EV startups and are far better positioned. All of their vehicles sold in the U.S. have final assembly in the country.

“Tesla is the clear structural winner: localized, strong market share, better insulated from trade risk. For everyone else, this is a margin reset and real drag on near-term earnings power,” Bernsteins Roeska said.

U.S. auto sales

U.S. auto sales in the first quarter came in well above industry expectations, as consumers flocked to buy new vehicles ahead of the tariffs taking effect, which many expect to result in higher vehicle prices.

“Along with increasing costs for importing vehicles, costs will increase for auto manufacturing in the US, and consumer costs for vehicles will increase,” S&P Global Mobility said in a tariff report last week.

S&P expects U.S. light-vehicle sales could migrate to between 14.5 million and 15 million units annually in the coming years, if the tariffs remain in effect. That compares with roughly 16 million vehicles sold in 2024.

Entry-level, less expensive vehicles are most at risk of being cut or seeing price increases, according to Wall Street and industry analysts. Thats because automakers often have tried to produce such vehicles, which historically have small profit margins, in lower-cost countries to the U.S.

For example, GM imported more than 400,000 entry-level crossovers for its Buick and Chevrolet brands last year from South Korea, tariff-free. The company has touted the vehicles as being the pinnacle for the automakers profitable growth in lower-margin, entry-level vehicles.

Other entry-level or more affordable vehicles that are set to be tariffed include the Toyota RAV4 and Honda CR-V from Canada as well as the Ford Maverick, Ford Bronco Sport and Chevrolet Equinox from Mexico.

Bank of America estimates new vehicle prices — which currently run an average of about $48,000 — could increase as much as $10,000 if automakers pass the tariffs on impacted vehicles in full on to consumers.

Automakers have largely been silent on how much they intend to increase vehicle prices due to the new auto tariffs, as well as additional levies on parts, aluminum and steel — if they raise prices at all.

“We continue to evaluate all of the scenarios,” Hyundai Motor North America CEO Randy Parker said Tuesday about potential price increases. “But what I would say to our customers is that, just like all things in life, tomorrow is never guaranteed. And if you‘re interested in buying a car, right now is a great time to buy a car, because as of today, we haven’t [risen] prices.”