The first real quarter of tariff impact took a major bite out of automakers’ bottom lines
Even with some trade deals on the books, new car prices are expected to rise in the coming months.
The first quarter of President Trump’s 25% tariff on the auto industry (and 25% tariff on the auto parts industry) is closed, and it’s been a bumpy road for automakers.
Car manufacturers have reported billions of dollars in tariff costs thus far, and many have given foreboding forecasts for the months ahead.
Toyota’s expecting a $9.5 billion hit in its current fiscal year and said tariffs already cost it more than $3 billion between April and June. Detroit automaker GM — which is still anticipating an up to $5 billion tariff charge this year — reported a $1.1 billion impact on profits.
Analysis of financial reports shows that foreign luxury automaker Porsche appears to have been dealt one of the most significant tariff charges as a percentage of quarterly revenue, though US rivals like Ford have been slapped with larger total levy amounts.
In total, the auto industry has reported at least $8.8 billion in tariff charges from April through June — about the market cap of Planet Fitness.
A few trade deals struck by the Trump administration could shift automakers’ tariff fortunes in the coming quarters: UK automakers’ tariff rate was lowered to 10% in May, while the rates for EU and Japanese automakers were lowered to 15% in July. Still, adjustments have already been priced in for some tariff forecasts, including Toyota’s.
With dealer inventories now largely consisting of vehicles built after May — and popular discounting strategies ended — new vehicle prices are expected to hit the gas in the coming months. According to Cox Automotive, prices could be 8% higher by year-end.
