Bitter Auto Industry Billionaire damage with Trump’s tariff

The main global automakers began the release of their results from the first quarter of 2025 with a common diagnosis: 25% tariffs imposed by the United States on vehicles and auto parts are causing drastic reconfiguration in the automotive sector. Ford, Toyota, Tesla, Volvo and BMW reported billionaire losses, retraction in sales and layoffs, amid the deepening of the trade war launched by President Donald Trump.

Instead of protecting the US industry, the tariff exposed its contradictions: it faced the most affordable models, pressured jobs and weakened exports.

Since April, with the entry into force of the new tariffs, the automotive sector has faced a sudden high operating costs. The impact was immediate: Ford passed up to $ 2,000 to the prices of models such as Mustang Mach-e, Bronco Sport and the Maverick pickup, all produced in Mexico. The company estimates a loss of US $ 2.5 billion in 2025 due to tariffs, which is trying to mitigate with cost cuts and discount programs in force until the July 4 holiday.

Toyota projects a 21% drop in its annual profit, with losses of over US $ 6 billion adding to the tariff and currency effects. Only in April and May, the automaker calculates a direct cost of $ 1.23 billion with tariffs. In addition, the weakened dollar in the face of commercial instability has reduced converted profits from US operations, which compromised the group’s global performance.

The instability caused by the tariff war forced automakers to suspend financial projections, reevaluate investments and postpone launches. Specialists heard by Reuters They warn that the uncertainty environment can lead to a retraction of up to 1 million vehicles in annual US sales if tariffs are maintained. The unanimous reading between the industry’s balance sheets is that the commercial policy adopted by the White House has unbalanced productive chains already tensioned.

Contrary to those promised by the Trump administration, there is no sign that tariffs boosted domestic production. The increase in logistical costs and the scarcity of inputs intensify the problems inherited from the pandemic, now aggravated by a commercial offensive that isolates the United States from its main partners.

Profits evaporate and automakers run to contain the damage

Tesla saw its vehicle sales produced in China to fall 6% in April, and deliveries plummeted 25.8% over the previous month. Model 3 and Model Y models, made of Shanghai and exported to Europe, were directly hit. The brand also faces growing rejection in European Union central markets, where consumers associate the figure of Elon Musk with extreme right political positions. In the domestic market, the company’s image also suffered shaking with protests and boycott.

With retraction in the two main markets, Tesla seeks to intensify its diversification strategy and accelerate its entry into countries such as India and Saudi Arabia, where Chinese automakers also expand presence. Production of a cheaper version of Shanghai Model Y, scheduled for 2026, is one of the main bets to preserve competitiveness.

Swedish Volvo, controlled by Chinese group Geely, announced the resignation of 125 employees at its Ridgeville factory in South Carolina – 5% of the plant’s workforce. Although it has not directly linked the cuts to the global cost reduction package of $ 1.88 billion announced in the first quarter, the automaker explicitly cited US tariffs as a factor that makes it impossible to maintain the current staff.

Volvo’s US unit still operates with low capacity: although designed to manufacture up to 150,000 cars a year, today it produces only the EX90 electric SUV and Polestar 3, with most sales still supplied by imports from Europe. In the first four months of the year, only 1,316 ex90 units were sold in the US.

Lobby and exception: an optimistic automaker amid chaos

Against the sector’s pessimism, BMW has maintained its forecast for 2025 and bet on a partial retreat of tariffs from July. The company claims to be in direct negotiation with US officials and believes its position as the largest car exporter from the US gives weight to the claims. With 43,000 direct and indirect jobs generated by its operations in South Carolina and an impact of $ 26 billion on the local economy, BMW maintains that its “economic weight” will be taken into account in tariff policy.

The optimism of the German automaker contrasts with the attitude of Mercedes-Benz, Ford and Stellantis competitors, who preferred to remove their projections for the year. BMW, however, admits that performance can be affected if tariffs extend beyond the expected. Its operating profit in the first quarter was 2.02 billion euros, with a margin of 6.9%, exceeding market expectations.

In a statement, the company included the caveat that logistics bottlenecks and shortage of pieces continue to threaten the production schedule. Nevertheless, the maintenance of the goals was well received by investors and considered a sign of institutional stability amid the tariff whirlwind.

Tariffs do not save jobs and expose contradictions of economic nationalism

Despite reindustrialization discourse, tariffs are not reversing global production logic. Ford is still importing from Mexico, GM depends on South Korea, and Volvo supplies the US with cars manufactured in Europe. What is observed is the increase in end consumer prices, uncertainty in logistics chains and suspension of projections for the rest of the year. Toyota, for example, calculates billionaire losses with foreign exchange fluctuations and additional costs imposed on part transportation.

Tariffs have not spared US workers. The cut announced by Volvo occurs precisely on a US plant, in a key state for the Republican Party. Ford maintained production in foreign plants and chose to readjust consumer prices rather than nationalize production. Even Tesla, considered as a symbol of local technological innovation, depends on China to supply its European markets.

At the same time, high costs have been passed on to chain based: suppliers, outsourced and consumers. The measure reinforces the tendency of stagnation in purchasing power and weakens the resumption of domestic consumption in the US. With retraction GDP in the first quarter, analysts begin to review down projections to the rest of the year.

China, Middle East and India enter the industry radar

With the tariff siege in the US and regulatory instability in Europe, automakers turn to new markets. Tesla and Byd articulate expansion in India and the Persian Gulf. Mass production of a cheaper version of Model Y is expected to Shanghai in 2026. Instead of reversing globalization, the tariff seems to accelerate it by other paths.

In the dispute for space in the so -called emerging markets, Chinese brands have taken advantage, with consolidated presence and state incentive. BYD, for example, increased by 19.4% its global sales of passenger vehicles in April, totaling 372,615 units in the month. Aggressive pricing strategy and technological diversification challenge traditional leaders.

In the coming months, the sector should continue to reorganize their productive chains. The tendency is for automakers to consider the geopolitical factor in their industrial decisions, favoring countries that guarantee exchange stability, access to raw materials and less volatile trade agreements.