Moody’s Ratings warns that global carmakers could lose $30 billion in operating profits by 2025 due to tariffs imposed by President Trump, affecting major brands like GM, Toyota, and Tesla.
The financial impact underscores the vulnerability of manufacturers to trade policy shifts, potentially influencing market dynamics and prompting operational changes within the automotive sector.
Moody's Ratings warns that global carmakers could face $30 billion in profit losses by 2025 due to new tariffs imposed by President Donald Trump. This warning surfaces amidst ongoing trade negotiations and tariff escalations.
Main automakers such as GM, Ford, Toyota, and Tesla are involved. To manage the situation, General Motors plans a $4 billion investment to boost US production, including new vehicle models in their line‑up, as a representative from GM stated:
Adding new vehicle models to its domestic lineup.
Tariffs have increased costs for automakers, affecting production strategies and profit margins. GM and Tesla are facing significant impacts due to tariffs on imported components, leading to higher operational expenses. As Tesla's financial executive noted, "Tariff costs rose by around $300 million last quarter due to duties on imported EV components such as batteries."
The automotive industry might see price hikes and reduced amenities as a countermeasure. As these tariffs strain their operations, automakers like Hyundai are shifting production locally to mitigate costs.
The ongoing tariff situation could lead to broader economic disruptions. J.P. Morgan Global Research warns of a potential global recession if trade tensions persist. The auto sector could indirectly affect crypto markets as global macro risks grow.
Historically, trade wars have led to notable losses in the auto sector. The 2018‑2019 U.S‑China trade war caused a $12 billion impact, showcasing the economic vulnerabilities inherent in such trade disputes.