ISTANBUL
The United States’ decision to impose 25% tariffs on imported automobiles and certain auto parts will lead to higher prices, lower consumer demand, and broadly negative credit implications for global automakers, Fitch Ratings said in a report Monday.
The tariffs, announced on March 26 and set to take effect on April 3, apply to vehicle and parts imports from all countries.
Fitch noted that while earlier tariffs on imports from Mexico and Canada were delayed, the latest move allows some flexibility for vehicles and parts compliant with the United States-Mexico-Canada Agreement (USMCA).
Under the new rules, manufacturers of USMCA-compliant vehicles can certify US content to avoid tariffs, but duties will still apply to non-US content. For USMCA-compliant parts, tariffs will be deferred until a process is established to verify US-sourced content.
Currently, imported vehicles make up about half of the US light vehicle market by volume. Mexico is the largest foreign supplier, followed by South Korea, Japan, Canada, and Germany.
“Most, but not all, imports from Mexico and Canada are compliant with the provisions of the USMCA trade agreement,” Fitch noted.
The agency warned that the new tariffs will be especially damaging for automakers selling Japan-, Korea-, and Germany-made vehicles into the US market.
“For Volkswagen (A-/Stable), the tariffs will hit the higher-margin luxury segment (including Porsche), further weakening FCF (free cash flow) and reducing rating headroom,” it said.
Toyota (A+/Stable) and Hyundai, including Kia (A-/Stable), will also feel the impact. While the US market accounts for roughly a quarter of global sales for both companies, 60% of Hyundai’s US sales are made in Korea and will be subject to tariffs, compared to 23% for Toyota vehicles made in Japan.
Automakers with strong manufacturing bases in the US, Canada, and Mexico may benefit from initial exemptions, though Fitch cautioned that evolving trade policies could still bring cost pressures.
“Both Stellantis (BBB+/Negative) and Nissan (BB+/Negative) have Negative Rating Outlooks and are relatively exposed to tariffs on Mexico and Canada,” the agency added.
Fitch expects manufacturers to raise vehicle prices to offset tariff-related costs, which could further dampen consumer demand. The agency revised its US light vehicle sales forecast for 2025 down by 300,000 units, from 16 million to 15.7 million.
Higher vehicle prices, combined with weakening consumer sentiment, are likely to weigh heavily on sales across the board, Fitch warned.
