Investing.com -- The Trump administration’s decision to impose a 25% tariff on nearly all imported vehicles and components is set to disrupt the U.S. auto industry.
According to Bernstein analysts, the immediate impact is expected to hit Detroit’s automakers the hardest while giving Tesla (NASDAQ:TSLA) a significant edge.
“Tesla is the clear structural winner: localized, strong market share, better insulated from trade risk,” analysts led by Daniel Roeska said.
In contrast, Ford Motor Company (NYSE:F) and GM (NYSE:GM) face headwinds that could slash their EBIT by as much as 30% in 2025, even with price increases and some sourcing adjustments.
The new tariffs, effective April 3, cover all imported passenger vehicles, light trucks, and key auto parts, with limited relief for USMCA-compliant vehicles. The move introduces a potential $110 billion annual cost increase across the sector, translating to an estimated $6,700 per vehicle.
For Ford and GM, the reliance on imports leaves them highly vulnerable, with earnings power expected to take a notable hit by the second half of 2025. Stellantis (NYSE:STLA) appears more resilient due to a higher share of U.S.-content in its Mexico-produced models, analysts said.
Tesla emerges as the primary beneficiary of this policy due to its highly localized supply chain and dominant market position.
“Every additional point of U.S. regional value content (RVC) adds to gross margin defense. Tesla leads here — nearly 60% localized — while luxury and niche brands trail far behind,” the analysts highlighted.
Tesla’s domestic manufacturing base allows it to avoid the cost pressures that other automakers will face when attempting to mitigate the impact of the tariffs.
Timing is another key factor. Bernstein notes that while Q2 may seem normal due to inventory buffers, “the real cost hit begins in mid-May and accelerates into Q3 earnings.”
The longer-term outlook is equally concerning, as 2026 may bring an even larger earnings impact of approximately 20% unless OEMs make significant shifts in their supply chains.
For Detroit’s automakers, the tariff shock leaves few attractive options. “You can hike prices or you can keep volumes — but you can’t do both,” analysts emphasize, highlighting the dilemma for mass-market brands.
Absorbing the tariff cost would erode margins, while passing it on to consumers risks a significant decline in sales.
Compounding the challenge, supply chain realignment is not a quick fix. Historical precedents show that moving production or reconfiguring sourcing typically takes 12–36 months.
Meanwhile, the policy itself appears durable, Bernstein says. “This policy is structured for longevity, not negotiation,” the report clarifies.
With no sunset clause or phase-in period, the tariffs will remain in effect unless explicitly repealed. Wall Street’s reaction may exert some pressure, but a policy reversal seems unlikely.