What happens when the U.S. government imposes 25% tariffs on all imported automotive components and vehicles?
The Center for Automotive Research (CAR) recently ran the numbers. The result: a financial earthquake for the U.S. auto industry, with an estimated total cost of nearly $108 billion.
Of that total, the Detroit Three — GM, Ford, and Stellantis — would shoulder almost $42 billion. And that’s not even the worst-case scenario. CAR’s analysis doesn’t factor in existing tariffs on steel and aluminum — two foundational materials in vehicle manufacturing. Which means the real-world impact? It could be even worse.
🚨 This Could Be Existential — and Not Just for Detroit
While GM, Ford, and Stellantis carry the largest dollar risk, they’re far from the only automakers in danger. These tariffs could pose an existential threat to smaller or financially vulnerable players — especially those heavily dependent on U.S. sales.
Mazda, Subaru, Volvo, and Jaguar Land Rover all import significant volumes and operate with limited profit buffers. Nissan and even Stellantis, despite their size, have recently shown signs of financial fragility. If these tariffs become reality, could one or more of them be pushed over the edge?
🧩 The Supplier Domino Effect
The spotlight is on automakers, but the supplier community may face even greater danger. Many suppliers run on razor-thin margins and depend on predictable volume and stable contracts. Automakers will inevitably push part of the $108 billion cost burden downstream — and many suppliers simply can’t absorb it.
And here’s the danger: if even one critical supplier fails, it could trigger production halts across multiple automakers. The system is too interconnected, too fragile. The risk isn’t isolated — it’s systemic.
🗣 Am I the Only One Crying Wolf?
Not at all. Here’s what some respected voices in the industry are already saying:
David Gantz, Rice University’s Baker Institute: The tariffs represent an “existential” threat to North American auto production.
Flavio Volpe, President of Canada’s Automotive Parts Manufacturers Association (APMA): “At 25%, absolutely nobody in our business is profitable by a long shot.”
Fredrik Westin, CFO of Autoliv: Some companies in the supply chain may not survive if these tariffs go into effect.
This isn’t political posturing — it’s economic reality. And it cuts across the entire ecosystem.
⚠️ Final Thoughts: Can This Industry Withstand Another Shock?
The U.S. auto industry is no stranger to disruption. It’s survived oil crises, a financial crisis leading to bankruptcies, COVID shutdowns, and chip shortages.
But this?
This could be the most existential threat the industry has faced since the 2008 financial crisis?
If Washington isn’t careful, this “America First” policy could result in fewer American automakers, fewer American suppliers, and fewer American jobs.