Even before the official announcement of the rates of tariffs for cars imported to the U.S. and separate levies on steel and aluminum, one thing most analysts were united on in their forecasts was the likely dramatic consequences on the financial sheets of automakers and expectations for prices to go up.
For now, the second one seems a bit more distant in the future, but the world's top car producers have already signaled they might lose billions due to tariffs.
Ford Motor predicted a full-year hit of about $1.5 billion in adjusted operating earnings due to tariffs and in recent days, Japanese automakers (Toyota, Nissan, Honda) all followed with a similar tone. Earlier, German giant Mercedes-Benz and Jeep-maker Stellantis also suspended their earnings guidance for 2025 amid growing uncertainty caused by tariffs.
And despite some ease in the financial markets due to a surprising turn of events and de-escalation of the direct U.S.-China trade war over the weekend, as they agreed to bring tariffs down to 30% for Chinese goods imported to the U.S. and 10% the other way around, automakers appear to be first in the row to feel the pinch of duties imposed by U.S. President Donald Trump.
On Tuesday, troubled Japanese auto maker Nissan announced a mega $4.5 billion loss for 2024-2025, and it also did not issue a net profit forecast for the financial year that began in April.
While Nissan's case is slightly different because it targets restructuring and turnaround as it looks to slash thousands of jobs and reduce the number of factories from 17 to 10, the company also warned of "uncertainty" related to tariffs.
The word uncertainty once again buzzed through the sheet that showed losses for the company that changed chief executive – and dropped a merger with Honda – only in a matter of months.
"Nissan expects the business to continue to be challenging with intense competition, forex and inflationary pressure. Yet, in our efforts related to U.S. tariff policy under our mitigation strategy, we are prioritizing U.S.-built products, optimizing local capacity, reallocating tariff-exposed production and working closely with suppliers to localize and adapt swiftly to market demands. Given the uncertainty related to the tariff environment, the guidance for operating profit, net income and auto free cash flow for the fiscal year is currently to be determined," it said.
By pushing for tariffs on carmakers and other manufacturers, the Trump administration has cited the "national security threat," aiming to encourage companies to expand domestic production capacity. Since Trump's return, indeed several firms have pledged a significant boost to investments in the U.S., including chipmaker Nvidia and pharmaceuticals group Roche.
Yet, for automakers, which in recent years have placed their bets more on electric vehicles, moving their production or establishing new sites directly from scratch means looking long-term, often considering all markets, not only American.
Caught in the whirlwind of tariffs and shifting market demands, Honda for example on Tuesday announced that due to the current slowdown in EV demand, it has decided "to postpone by approximately two years its plan, announced on April 25, 2024, to build a comprehensive EV value chain in Canada to strengthen its EV supply chain in North America."
Also announcing its financial results, Honda reported it forecasted a 70% drop in net profit for the 2025-2026 fiscal year. "Tariff impact and recovery efforts" will hurt operating profit, it warned, estimating they will cost the company around 450 billion yen ($3.04 billion) over the year.
Last month, Honda announced it was shifting hybrid Civic production from Japan to the U.S.
Similarly, last week, Toyota, the world's biggest automaker by sales, said it expected a 35% year-on-year drop in profits for the current financial year, citing "estimated impacts" of the U.S. tariffs.
This comes despite an executive order Trump signed at the end of April to relax some of his 25% tariffs on automobiles and auto parts aimed at easing import taxes for vehicles that are made with foreign parts, but assembled in the U.S.
That order marked yet another reversal in quickly changing trade policies since Trump returned to the White House in January.
