An automotive industry outlook paints a dim picture of business for the year as a result of U.S. trade tariffs.
The AutoForecast Solutions prediction predicts light-vehicle sales will fall for the first time since 2022 due to uncertainty around the tariffs, which the Trump administration imposed in part to boost stateside manufacturing.
The industry data and advisory provider pointed to the cascade of effects from the Trump administration’s tariff maneuvers over the past three months. The ever-shifting trade policy has left companies, countries and market watchers scratching their heads and appealing for clarity.
AutoForecast pointed to the Federal Reserve’s plans to keep interest rates where they are due to higher inflation and unemployment risk; Moody’s downgrade of the U.S. credit rating, its first change since 1949; the Conference Board Leading Economic Index’s nearly 2% drop in March-April, a sign of economic slowdown; steadily falling consumer expectations of the economy; and rising loan defaults.
Automakers are calculating tariffs’ cost to their businesses, and many have pulled guidance for the year, the forecast pointed out.
Toyota expects $1.2 billion in costs, General Motors $5 billion, and GM estimates it will sustain a 20% revenue decline, the report said. Meanwhile, Ford is raising prices on models assembled in Mexico, including the Bronco Sport, Maverick and Mustang Mach-E, AutoForecast pointed out.
Trump administration portrayals of carmakers’ recent U.S. manufacturing moves as results of the tariffs are misleading, the forecast indicated.
“All of the positive rhetoric coming from the administration flies in the face of the reaction from many other voices,” AutoForecast said. “All of this comes at the cost to vehicle sales and production.”
It cited a Trump administration press release touting a shift of more production by Mercedes to the U.S. as the “TRUMP EFFECT” resulting from the president inspiring “making things in America again.” But in fact, Mercedes is simply replacing production of models ending production at its Alabama plant before 2027, the forecast said.
Similarly, U.S. production increases of BMW, Honda, Hyundai, Kia, Stellantis and Toyota also cited as Trump effects had already been announced or planned before Trump’s inauguration “and are unrelated to the current trade war,” AutoForecast said.
