Global carmakers could collectively lose as much as $30 billion in operating profits in 2025 as President Donald Trump’s escalating tariff policies unsettle the international car industry, according to a new warning from Moody’s Ratings.
The agency said the latest trade measures could erase more than one-fifth of the operating profit automakers earned in 2024, with margins expected to contract by 100 to 150 basis points.
Moody’s noted that the full financial toll will become clearer when major manufacturers begin releasing third-quarter results later this month.
The forecast factors in Trump’s new trade arrangements with the European Union and Japan, which Moody’s said provide only limited stability.
Talks with Mexico, Canada, and South Korea, home to Hyundai and Kia, remain unresolved, prolonging uncertainty around production strategies, export limits, and cost structures.
“Automakers will continue to try to offset tariffs by reducing amenities in their vehicles and raising prices,” Moody’s said, warning that consumers are likely to pay more for less while companies adjust.
Manufacturers, including Volvo, Hyundai, Kia, and General Motors (GM), have begun localizing more of their production to limit exposure to tariffs. GM announced plans to invest an additional $4 billion to expand U.S. manufacturing and introduce new domestic models.
The agency cautioned that such structural changes require significant capital and time, delaying returns and diverting funds from innovation areas, such as electric vehicles.
According to Yahoo Finance, the combined tariff impact on leading global carmakers has already reached $11.7 billion as of the June quarter, with Toyota facing the largest exposure, followed by Volkswagen, GM, Ford, and Honda.
Although Chinese automakers were excluded from that count because they do not sell in the U.S. market, the disruptions are rippling through their parts supply chains worldwide.
Even Tesla, which manufactures all its vehicles in the U.S., reported an additional $300 million in costs last quarter due to tariffs on imported electric-vehicle components, mainly batteries.
“As automakers gradually gain clarity over future tariff levels, they will continue assessing and implementing more long-term structural measures, such as adjusting supply chains and production footprints,” the agency said.
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