Why Tariffs Are Becoming Unsustainable For Automakers

TL;DR

Tariffs are costing automakers billions they cannot absorb, forcing inevitable price hikes on cars already averaging nearly $50,000.

Key Points

• 1.Toyota, despite record US sales, lost nearly $8 billion to tariffs in nine months, cutting profits 25% and reducing margins from ~10% to 7.6%.
• 2.A 25% tariff hits all foreign-made parts in cars built in Canada or Mexico, and 15% applies to Japan imports — Toyota's Tacoma (best-selling midsize truck) is made in Mexico and can't move to the US since all US factories are at full capacity.
• 3.Analysts warn prices, already flat, will spike by May–August 2025 as tariff costs fully hit the market, with one dealership group's average sale price already hitting a record $62,000.