Trump Administration and Tariff Policies

• The U.S. lowered the base level of duties on most Chinese goods to 30% from 145%, and China cut its levies on many U.S. products to 10% from 125% as part of a 90-day tariff pause scheduled between the nations that is to take effect this week.
• A U.S.-UK trade deal announced May 8 would allow imports of 100,000 vehicles annually by UK car manufacturers under a 10% “reciprocal tariff,” with additional vehicles subject to 25% levies. The American Automotive Policy Council expressed disappointment that in certain instances, “it will now be cheaper to import a UK vehicle with very little U.S. content than a USMCA compliant vehicle from Mexico or Canada that is half American parts.”
• A U.S. Customs and Border Protection guidance document for the auto parts tariffs that took effect May 3 indicated that US-Mexico-Canada Agreement (USMCA)-compliant parts have a “0 percent additional ad valorem rate of duty.” The duration of this exemption is unknown.
• A pair of executive orders announced on April 29 will ease some of the impact of certain automotive import tariffs. One order will establish a complex system of temporary and partial reimbursements for certain tariffed auto parts, and another order indicates tariffed vehicles and auto parts will not “stack” on other levies, such as the 25% duty on steel and aluminum. One large supplier quoted in Automotive News indicated the orders were a positive step, while an unnamed major supplier stated the tariff revisions were “not cause for celebration” as the industry will still encounter significantly higher operational costs. An analyst from Wedbush described the revised tariffs as a “gut punch” for the auto industry.
• May 16, 2025 is the deadline for submitting public comments regarding the Trump administration’s Section 232 investigation into imports of processed critical minerals and their derivative products. 

Automotive Key Developments

• Automotive News provided updates on suppliers’ concerns regarding the potential for lower production volumes this year as a result of automotive import tariffs, as well as the challenges of assessing USMCA-compliant content in vehicles.
• GM estimated the Trump administration’s tariffs could increase its costs by up to $5 billion this year, and potentially reduce 2025 net profit by up to 25% year-over-year. The automaker expects to offset its projected tariff exposure by roughly 30% through spending reductions and shifting more supplies and manufacturing to the U.S. In 2024, GM imported more vehicles into the U.S. than any other automaker. 
• Japanese automakers could collectively experience a $19 billion impact from U.S. import tariffs, according to analysis from Bloomberg.
• Toyota and Honda projected annual net profit declines of 35% and 70%, respectively, for fiscal year ending March 2026, if U.S. automotive import tariffs are maintained. Toyota estimated its tariff impact reached $1.3 billion within just two months, while Honda expects an annual tariff impact of up to $3 billion.
• Ford projected a $2.5 billion impact from tariffs in 2025, but noted it plans to offset up to $1 billion of the costs. 
• Revised analysis from the Anderson Economic Group estimates the Trump administration’s current automotive tariff policies will raise vehicle costs from $2,000 to $15,000.
• U.S. new light-vehicle inventory is down by an estimated 24% year-over-year, representing a 61 days’ supply, following robust sales in April.
• Kelley Blue Book estimated the U.S. new light-vehicle average transaction price (ATP) rose 2.5% in April 2025 from March. New-vehicle sales incentives fell to 6.7% of ATP last month, down from 7% in March and compared to a pre-pandemic norm of roughly 10%.
• The U.S. House Ways and Means Committee included a measure to eliminate consumer tax credits of up to $7,500 for a new EV and $4,000 for a used EV at the end of 2025 in the “Big, Beautiful” tax package introduced on May 12. The initial proposal would extend new EV tax credits until the end of 2026 for automakers that sold less than 200,000 EVs in the U.S. between 2010 and 2025. 
• California and 16 other states filed a lawsuit over the Trump administration’s suspension of the $5 billion National Electric Vehicle Infrastructure (NEVI) program created by the 2021 Bipartisan Infrastructure Law.
• The U.S. House on May 1 passed the third of three Congressional Review Act resolutions to repeal Clean Air Act waivers issued by the Environmental Protection Agency for California’s vehicle emissions programs. A Senate vote related to the proposals has not yet been scheduled.
• Federal Reserve Chair Jerome Powell cautioned the U.S. “may be entering a period of more frequent, and potentially more persistent, supply shocks” due to economic and trade policy uncertainty.

OEMs/Suppliers 

• First-quarter 2025 profitability dropped by 2.3% for Hyundai, 6.6% for GM, nearly 40% for Volkswagen, and over 60% for Ford.
• Automakers that include Ford, Volvo, Stellantis and Mercedes recently suspended 2025 financial guidance due to tariff-related uncertainty.
• Magna estimated its annual direct tariff costs will reach $250 million for 2025.
• Nissan reported a net loss equivalent to $4.55 billion for its fiscal year ended March 31, 2025 due in part to restructuring charges. The automaker intends to cut 15% of its global workforce, and consolidate its global production base to 10 assembly plants from 17.
• Ford plans to raise prices by as much as $2,000 on certain Mexico-produced models in response to U.S. import tariffs.
• GM plans to eliminate a shift at its Oshawa Assembly plant in Ontario in response to “forecasted demand and the evolving trade environment.”
• Aptiv plans to establish two new plants in China in the second half of this year that will produce high-voltage connectors and active safety products.
• Stellantis plans to launch a lower-priced version of its U.S.-made Ram pickup truck later this year to boost sales and mitigate tariff exposure. The automaker previously shifted pickup truck production for certain models from Michigan to Mexico.

Market Trends and Regulatory

• AlixPartners predicts Chinese brands will account for 30% of the global auto market by 2030, compared with 21% in 2024.
• BYD has a goal to achieve 50% of its sales outside of China by 2030.
• Congress voted to repeal an Environmental Protection Agency rule on National Emission Standards for Hazardous Air Pollutants related to rubber tire manufacturing. 
• According to a Gartner survey of 126 supply chain executives, 47% of respondents were renegotiating contracts with suppliers to mitigate the impact of tariffs.

Autonomous Technologies and Vehicle Software

• Automotive News provided an overview of recent developments in autonomous driving.
• Ford plans to cut 350 connected-vehicle software jobs in the U.S. and Canada, and the reductions account for roughly 5% of the total team, according to a report in The Detroit News.
• Waymo will partner with Toyota to develop robotaxi technology for personally-owned vehicles. Waymo’s self-driving partnerships include Hyundai and China’s Geely.

Electric Vehicles and Low-Emissions Technology

• U.S. EV sales declined by roughly 5% in April, amid a 10% YOY increase in overall new-vehicle sales. Global EV sales in April were up by an estimated 29% YOY, led by a 35% increase in China.
• Honda will postpone a planned $11 billion investment in new EV factories in Ontario, Canada due to slowing demand in North America.
• GM’s Orion Assembly Plant in Michigan may not operate as a fully electric vehicle factory as originally planned, according to unnamed sources in Crain’s Detroit.
• The American and Chinese car markets are likely to diverge further due to differences in supply chain costs and consumer preferences, as well as the nations’ ongoing trade conflicts.
• GM suspended a project with Piston Automotive to establish a $55 million hydrogen fuel cell plant in Detroit.
• Stellantis delayed production of its first battery-electric Ram pickup truck until 2027.
• Hyundai plans to launch a hydrogen production and dispensing facility for heavy-duty trucks in Georgia.
• Toronto-based battery recycler Li-cycle is pursuing a sale of its business or assets.
• Canadian electric truck and bus maker Lion Electric faces a “very high” likelihood of liquidation after the Quebec government decided not to support a public bailout.