Musk’s Tesla a rare winner as Trump’s auto tariffs spread the pain
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Most carmakers stand to lose as US President Donald Trump imposes new levies on auto imports and key components from next week.
PHOTO: REUTERS
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DETROIT – As the fallout from US President Donald Trump’s tariff plans comes into relief, a harsh truth is emerging for the automotive industry: There are lots of losers and not many winners.
From South Korea’s Hyundai Motor to Germany’s Volkswagen and America’s own General Motors, many of the world’s most prominent carmakers will soon face sharply higher costs from Mr Trump’s new levies on auto imports and key components.
“There are very few winners,” Mr Sam Fiorani, vice-president of global vehicle forecasting for AutoForecast Solutions, said in a phone interview. “Consumers will be losers because they will have reduced choice and higher prices.”
One notable winner in the tariff chaos is Mr Elon Musk. His Tesla has large factories in California and Texas that churn out all the electric vehicles it sells in the US.
Ford Motor, too, could face a less severe impact than some rivals, with about 80 per cent of the cars it sells in the US being built domestically.
Starting next week, the new 25 per cent tariffs will apply to all imported passenger vehicles and light trucks, as well as key parts like engines, transmissions and electrical components, on top of any duties already in effect.
The tariffs give automakers that heavily source parts in the US an edge, and Mr Trump also allowed an exemption: The new levies will only apply to the non-US share of vehicles and parts imported under a free-trade agreement with Canada and Mexico.
That stands to soften the blow for vehicles whose supply lines zig-zag across the continent. Tariffs on parts from Canada and Mexico that comply with the trade deal also would not take effect until the US sets up a process to collect those levies. The US neighbours could use that window to try to stave off full implementation, even if it is a long shot.
The move is nonetheless a broadside against the continent’s free-trade agreement that Mr Trump renegotiated during his first term in office that has given rise to a closely integrated supply chain spanning North America. Canadian Prime Minister Mark Carney called the tariffs a “direct attack”.
Foreign brands heavily reliant on imported vehicles will face the most pressure. South Korea’s Hyundai risks being among the hardest hit. Although the carmaker and its affiliate Kia have plants in Alabama and Georgia – and announced a US$21 billion (S$28 billion) US expansion plan this week – it imported more than a million vehicles to the US in 2024. This accounts for more than half of its sales in the country, according to figures from Global Data.
Hyundai “remains committed to the long-term growth of the US automotive industry through localised production and innovation,” the company said in a statement, noting it employs 570,000 people in the US.
Hyundai and Kia may have to pay as much as 10 trillion won (S$9 billion) every year for tariffs to the US if the 25 per cent tariffs are executed, according to Mr Hyuk Jin Yoon, Seoul-based analyst at SK Securities. That accounts for nearly 40 per cent of the total operating profit that the two carmakers earned in 2024.
Despite having four assembly plants spread across Kentucky, Indiana, Mississippi and Texas, plus engine plants in West Virginia and Alabama, Toyota Motor, the world’s biggest automaker, imports about half of what it sells in the US.
Detroit’s carmakers were not spared, either. GM imports some Chevrolet Silverado pickup trucks from plants in Mexico and Canada, the entry-level Chevy Trax compact SUV from South Korea and its family car, the Chevrolet Equinox crossover SUV.
In 2024, GM sold more than 200,000 each of the Equinox and Trax, which are among its cheapest vehicles. The automaker also makes electric versions of the Equinox and Blazer in Mexico.
Stellantis NV makes the Jeep Compass and Wagoneer S SUVs in Mexico. The company imports its Chrysler Pacifica minivans from Canada and compact Dodge Hornet and Fiat 500 from Italy.
Even though Ford is more US-reliant than its cross-town rivals, it faces pain of its own. The carmaker builds its entry-level Maverick small pickup in Mexico as well as the Bronco Sport compact SUV and Mustang Mach-E electric vehicle. BLOOMBERG
