Automakers take a hit from tariffs, but some still see strong earnings

"Automakers have been footing a hefty tariff bill to the tune of $30 billion across the industry this year, according to a recent analysis from Moody's. The industry is also grappling with a shortage of semiconductors, leaving them without the chips they need to build some vehicles, as well as a fire at an aluminum plant that's hurting the supply chain for Ford and Stellantis."

"Despite those headwinds, quarterly earnings reports from automakers are so far showing resilience. General Motors reported $3.4 billion in profits last quarter and Ford brought in $2.6 billion, both beating expectations. Stellantis, the maker of Jeep, Dodge, Chrysler and Ram, increased its revenues by 13% year over year. Hyundai, despite seeing a 29% decline in profits compared to the same quarter last year, still plans to meet its targets for the year."

"Part of the reason for automakers' positive reports is that Trump lowered tariffs on goods from Japan and Europe from 25% to 15%, and just recently announced a similar deal with Korea. While a 15% tariff is still substantial, the changes were welcomed by automakers. Meanwhile, a recent policy change eased the burden of tariffs on imported parts that go into U.S.-built cars."

Automakers paid about $30 billion in tariffs this year. The industry faces semiconductor shortages and an aluminum-plant fire disrupting supply chains for Ford and Stellantis. Quarterly results show resilience: General Motors earned $3.4 billion, Ford $2.6 billion, and Stellantis grew revenue 13% year over year; Volkswagen reported a more-than-billion-dollar loss. Hyundai's profit fell 29% but it expects to meet annual targets. Tariffs on goods from Japan and Europe were cut from 25% to 15%, with a similar deal with Korea and eased tariffs on imported parts for U.S.-built cars. Rising vehicle prices and regulatory rollbacks are boosting margins.

Read at www.npr.org