The US automotive industry is preparing for a massive financial shock as the 25% tariffs on imported vehicles and parts are set to take effect on April 3. According to Bernstein analysts, while the industry will likely survive the disruption, it will face long-term scars and redrawn competitive boundaries.
The sweeping tariffs, announced by the Biden administration, aim to protect domestic manufacturing. However, the financial fallout is expected to be severe, particularly for import-heavy automakers. Bernstein estimates the unmitigated tariff impact could reach approximately $110 billion sector-wide, equating to around $6,700 per vehicle.
Ford and GM Face Profit Declines, Tesla Stands to Gain
Automakers like Ford (NYSE:F) and General Motors (NYSE:GM) are expected to bear the brunt of the tariffs. Bernstein predicts these companies could experience EBIT declines of up to 30% in 2025, even with some price pass-through strategies and sourcing adjustments.
On the other hand, Tesla (NASDAQ:TSLA) is projected to emerge as the biggest winner. Its US-based manufacturing footprint and localized supply chain make it far less vulnerable to the new trade barriers. With a strong market share and less exposure to import tariffs, Tesla is expected to benefit from a more favorable cost structure compared to its competitors.
Rivian (NASDAQ:RIVN) is also positioned to weather the storm due to its domestic production. This insulation from tariffs could enhance its competitiveness in the growing EV market.
Stellantis to Remain More Resilient
While US automakers are scrambling to mitigate the impact, Stellantis (NYSE:STLA) is projected to be more resilient. Its Mexico-based production facilities, which use a high percentage of US content, will shield it from the full brunt of the tariffs. This strategic advantage could help Stellantis maintain more stable profit margins compared to its Detroit-based rivals.
Tariffs to Trigger Major Industry Shake-Up
Although the tariffs take effect in April, Bernstein analysts warn that the full financial impact will not be immediately visible. They expect the cost burden to intensify by mid-May and become more pronounced in Q3 earnings.
The FY26 outlook appears even grimmer. Bernstein projects a 20% larger earnings hit by 2026 unless automakers dramatically shift sourcing strategies. This could trigger a wave of supply chain overhauls, including more domestic production and partnerships with North American suppliers.
Wall Street Pressure Could Force Rethink
While past tariff policies have sometimes been reversed, Bernstein analysts believe this time could be different. They describe the current rollout as “more coordinated and operationally detailed”, making a policy reversal less likely.
However, analysts suggest that Wall Street’s reaction could influence the administration. If automaker stocks face significant sell-offs and market instability grows, the government may face pressure to reconsider the tariffs.
What It Means for Consumers
For US car buyers, the tariffs are expected to lead to higher vehicle prices, regardless of whether they prefer imported or domestically produced cars. Since many US-made vehicles still rely on imported parts, the tariffs will push up production costs, forcing automakers to pass those expenses onto consumers.
Tesla and Rivian Gain, Others Struggle
As the US auto industry braces for a $110 billion financial hit, Tesla and Rivian are positioned to gain market share, thanks to their localized production models. Meanwhile, Ford, GM, and other import-dependent automakers face significant profit declines.
With the full tariff impact expected to hit by mid-May and intensify into 2026, the industry is entering a period of uncertainty and upheaval. While automakers will strive to adapt through sourcing adjustments and price hikes, the tariffs are set to redraw the competitive landscape of the US auto sector for years to come.
