Stay tuned for the latest on the Trump administration’s activities.
The tariffs unveiled by President Trump are set to impact both domestic and international car manufacturers significantly. However, the extent of these effects will differ for each company based on their individual situations.
### Tesla
Elon Musk, a close ally of President Trump, leads Tesla, which is somewhat shielded from these tariffs. This is mainly because Tesla manufactures its vehicles for the U.S. market in California and Texas. However, it’s worth noting that about 25% of the car parts Tesla uses are sourced from overseas, according to the National Highway Traffic Safety Administration.
Tesla also faces a dip in global sales, partially due to Musk’s political stance, which hasn’t resonated well with moderate and liberal consumers. Additionally, some countries might retaliate against these tariffs by targeting Tesla specifically. For instance, certain provinces in Canada have stopped offering incentives for Tesla’s electric vehicle buyers.
### General Motors
Being the United States’ largest automaker, General Motors (G.M.) imports many of its top-selling vehicles from Mexico, such as the Chevrolet Silverado. Last year, about 40% of G.M.’s U.S. sales came from cars assembled abroad. This dependency makes the company vulnerable to the new import taxes.
Nonetheless, G.M. has had a solid run of profitability recently, which could help it withstand the tariff challenges better than others, especially if there’s any easing or removal of these tariffs under Trump’s direction.
### Ford Motor
Ford is less dependent on imported vehicles compared to its peers, with 80% of its U.S. sales being domestically produced cars. This somewhat buffers Ford from the 25% tariffs on imported vehicles. However, Ford isn’t completely in the clear. It relies on international manufacturing for key components like engines, with a factory in Ontario providing powertrains for some trucks.
Ford has been recording significant losses in its electric vehicle segment, where its Mustang Mach-E is manufactured near Mexico City, adding pressure amid the tariff changes.
### Stellantis
Stellantis, the parent company of Chrysler, Dodge, Jeep, and Ram, assembles several popular models, like the Ram trucks, in Mexico. Ontario produces the Chrysler Pacifica minivans. Created from the 2021 merger between Fiat Chrysler and Peugeot, Stellantis has been battling slow sales and is currently searching for a new CEO, putting them at a higher risk if the tariffs persist. This struggle is similar for companies like Nissan that are bracing for long-term implications of these tariffs.
### Toyota
Toyota, a major player from Japan, relies heavily on the U.S. market, having sold 2.3 million vehicles there last year. However, about a million of these vehicles were made outside the U.S., largely in Canada, Mexico, and Japan. This could spell trouble for Toyota and its close partners, Subaru and Mazda. Yet, Toyota is better positioned than many of its counterparts due to its solid profitability and reputation as one of the industry’s best-managed companies.
### Volkswagen
Volkswagen, Europe’s leading automaker, faces significant challenges from the tariffs, given its limited U.S. manufacturing presence with just one factory in Chattanooga, Tennessee. This plant produces the Atlas and ID.4 models, while the rest, such as Audis and Volkswagens from Mexico and Porsches from Germany, are imported. The company has already been struggling with declining sales in China amidst growing local competition in affordable electric and hybrid vehicles. With Trump’s tariffs, their push into the U.S. market becomes even tougher.
### Hyundai and Kia
The South Korean carmakers, Hyundai and Kia, have made significant inroads in the U.S., recently investing in a new electric vehicle plant in Georgia. This may help them sidestep some tariffs for specific models. On Monday, Hyundai’s executive chair, Euisun Chung, stood beside President Trump at the White House, declaring an additional $21 billion investment in U.S. ventures, including a new steel plant in Louisiana. Despite having three factories in Georgia and Alabama, they still face tariffs on the numerous cars they import from South Korea. This situation is tied to a trade agreement, renewed during Trump’s first term, between the United States and South Korea back in 2007.
