These effects are compounded in the fast-moving automotive industry, as new tariffs risk upending production and sales on a worldwide scale. Tesla, General Motors, Jaguar Land Rover, and Porsche are among the car manufacturers grappling with the potential repercussions of these tariffs. Announced just yesterday, the tariffs will significantly impact future production decisions and American purchasing patterns.
Elon Musk, CEO of Tesla, recently admitted that the company cannot escape the bite the tariffs have taken out of Tesla.
“Important to note that Tesla is NOT unscathed here.” – Elon Musk
General Motors is about to face a $200 million hit. Yet they are projected to incur at least a $10.5 billion tab as a result of the tariffs. The company brings in components and vehicles from Korea and Mexico. In fact, since the announcement, its stock has already fallen over 7%. Likewise, Ford is facing down a large tariff bill beginning at $2 billion. Depending on their coverage, the tariffs could hit all imports worth $300 billion to $400 billion, estimates Macquarie.
With regards to another auto elephant in this room, Volkswagen is even more dependent on the Korean and Mexican production than GM. Jaguar Land Rover and Porsche are in the same boat. They may need to limit output at home where it counts the most. The tariffs specifically hit the two books export heavyweights, Germany and the UK, making life extremely difficult for these manufacturers.
Patrick Anderson, chief executive of the East Lansing–based Anderson Economic Group, expressed alarm. He cautions that some automakers may instead decide to pull some models from the U.S. market entirely.
“The major takeaway I think people should know about this is no vehicle is 100% US-made,” – Patrick Masterson
Such a pullback would mean less competition and choice for American consumers. When there’s less availability, they tend to go up in price regardless. The duties don’t only hit American consumers and businesses. Ferrari has already announced a 10% price increase to help offset new duties.
Even Toyota’s Prius, shipped from Japan, might be in trouble. This scenario speaks volumes to the wide-reaching effect of global supply chains. With automakers taking on these hurdles, as well as preparing for frequent changes in market dynamics and consumer behaviors, the industry prepares for a new transition period.
“The consumer is going to feel it across the board and I really don’t think that any automaker is going to be spared from this, Tesla included.” – Patrick Masterson
Toyota’s Prius, which is shipped from Japan, is another model potentially affected, demonstrating the wide-ranging impact on global supply chains. As automakers navigate these challenges, the industry braces for potential shifts in market dynamics and consumer behaviors.