From price hikes to expanded incentives and even layoffs, automakers are responding to President Trump’s unprecedented and shocking tariffs.
On Wednesday, Trump made good on his tariff threat for foreign-made autos, slapping 25% tariffs across the board on foreign-made cars that began today. Tariffs on the crucial auto parts sector will begin on May 3 after the Commerce Department determines appropriate levies.
Shares of GM (GM), Ford (F), and Stellantis (STLA) were slammed along with the broader market as concerns over profits, demand destruction, and the sensitivity of the auto parts sector roiled global markets.
German automaker Volkswagen (VWAGY) is the first to add an “import fee” to autos affected by the 25% tariff, per a memo sent to dealers reported by the Wall Street Journal.
Volkswagen’s rail shipments from Mexico, where the German automaker builds its high-volume Tiguan SUV, will reportedly be suspended at this time, and tariff-affected vehicles located at ports in the US will remain there until the company determines next steps.
VW’s giant plant in Chattanooga, Tenn., would see production impacted, most likely due to a potential tariff cost to auto parts coming across the border. A Volkswagen spokesperson did not immediately respond when reached for comment.
Read more: What Trump’s tariffs mean for the economy and your wallet
Among US automakers, the Dearborn, Mich.-based Ford will actually implement price cuts on most of its vehicles by expanding employee pricing to all US buyers starting today. A Ford spokesperson said this could mean “savings of up to $4,000 on a vehicle, on top of any other deals that dealers are already offering.”
Ford offering price cuts in this environment may be a good way to help everyday Americans. But others see it as a gimmick for short-term sales gains. Wolfe Research said as much, calling the move “hard to understand” as anything other than a marketing ploy for Trump-leaning consumers, a goodwill gesture by Ford for potential preferential treatment from Trump, or simply a “[market share] grab at the expense of price” and profit margins.
Smash it up: President Donald Trump holds a signed executive order during an event to announce new tariffs in the Rose Garden of the White House, Wednesday, April 2, 2025, in Washington. (AP Photo/Evan Vucci) ·ASSOCIATED PRESS
Crosstown rival GM, the top US automaker by volume, told Yahoo Finance it wouldn’t have a tariff response at this time and likely wouldn’t until the company’s Q1 earnings call on April 29.
However, GM did confirm that it will increase production at its Ft. Wayne, Ind., plant where it builds Silverado and Sierra pickups. GM said it will hire additional workers, though the plant is already running three shifts, so production gains will be “incremental.” Most hiring is for backfill and workers taking vacation over the coming months.
Rival Stellantis won’t be implementing price hikes at the moment, the automaker told Yahoo Finance. However, the company confirmed that it would be idling production at plants in Mexico and Canada and also confirmed a Reuters report that 900 US-based workers would be temporarily laid off because of the tariffs.
The Stellantis layoffs will begin Monday, the company said, and may draw the ire of President Trump, whose ostensible reason for implementing tariffs is to boost US manufacturing hiring.
“We are continuing to assess the medium- and long-term effects of these tariffs on our operations, but also have decided to take some immediate actions,” Antonio Filosa, Stellantis COO for the Americas, said in a memo to employees.
Foreign luxury automakers are also reeling from the tariffs, as prices for those vehicles will jump considerably. Per Bloomberg, Mercedes production chief Jörg Burzer said the company is considering making more vehicles in the US in response to the tariffs and is also weighing withdrawing its entry-level models because tariffs would make them uncompetitive in the US market.
A Mercedes spokesperson told Yahoo Finance the company cannot comment on price moves or output changes, though the company did add reports of pulling models from the US are “without any merit.”
Mercedes rival BMW is in a tough bind too, although the company makes all of its SUVs in the US and even exports them to other markets. The company has a plant in Mexico where other cars like the 3-Series sedan and performance-oriented M2 are built; BMW will price-protect those vehicles through May production for the 3-Series and to May 1 for the M2 and 2-Series. That means the Bavarian automaker will eat the tariff cost, for now.
Luxury automaker Porsche said it may pass on the costs of tariffs to its US buyers.
“When the subject [of tariffs] becomes concrete, we will assess which price options there are to pass on to consumers,” CFO Jochen Breckner said in a news conference following the release of results in mid-March. “We have a very, very strong brand, a great customer base, a loyal customer base, and great product. So in the first place, we would look into additional pricing” to preserve profit margins, he said.
Not surprisingly, Wall Street is concerned about where this leaves the automakers and what comes next.
“As we gather more information from industry participants, we increasingly believe that the burden of tariffs will be shared amongst OEMs, consumers (via higher ATPs), dealers, and some suppliers,” Deutsche Bank analyst Edison Yu wrote on Thursday. “Near-term, we expect the OEMs to adjust production allocation (i.e., certain vehicles/trims) and utilize any excess capacity (or add extra shifts) in the US without making significant capex investments.”
Yu added, “We don’t think automakers and the supply base can make such structural changes quickly, especially amid more mid-term uncertainties around the political climate.”
This story is developing. Check back for more updates.
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on X and on Instagram.
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