American automakers are bracing for price increases as escalating tariffs on imported components squeeze profits, threatening to push new vehicle costs to record highs. With supply chains spanning multiple countries, manufacturers face mounting pressure to pass expenses to consumers amid declining earnings.
General Motors reported a 35% quarterly net income drop, attributing $1.1 billion in losses directly to tariffs. Ford absorbed $800 million in tariff costs last quarter, while Stellantis saw $350 million in impacts. Analysts estimate tariffs add $2,000-$3,000 per domestically built vehicle—expenses automakers have temporarily absorbed to maintain sales.
"The math is unsustainable," said Lenny LaRocca of KPMG’s automotive practice, predicting significant price hikes by early 2025. Cox Automotive forecasts average new car prices could exceed $50,000 by year-end, with imported models rising up to $5,000.
Over 50% of components in US-assembled vehicles originate abroad, according to White House estimates. Bank of America notes many suppliers prefer paying 25% tariffs over relocating production—a process requiring billions in investment and years to operationalize.
As profits decline, automakers’ capacity to fund electric vehicle transitions and factory relocations weakens, creating ripple effects across global supply chains. With no immediate relief in sight, consumers worldwide may soon bear the cost of shifting trade policies.
