Tariff Talk

Import tariffs and rising costs are squeezing profits at the Detroit 3, and the financial strain is expected to hit factory workers hard. United Auto Workers members at Ford, General Motors, and Stellantis receive annual profit-sharing checks tied to their employer’s previous year performance, and after years of record bonuses—each topping $10,000 in 2024—those payouts are projected to drop by $3,000 to $5,000 or more. Stellantis, which reported a nearly $2.7 billion loss in the first half of 2025, may not pay anything at all, which would mark the first time since 2011 its U.S. hourly employees go without a check.

Subaru managed to avoid roughly $1 billion in tariffs due to reduced U.S. duties, but the automaker still expects its profits to drop by half this year. CEO Atsushi Osaki said the company is reassessing the timeline and focus of its ¥1.5 trillion electrification investment and is exploring ways to increase output from its U.S. plant. With the expiration of U.S. EV tax credits and slowing demand for battery-electric vehicles, Subaru plans to raise the production share of internal combustion and hybrid models. While the company previously aimed to electrify its entire lineup in the first half of the 2030s, it now targets a 50 percent all-electric portfolio sometime after 2030.

Toyota plans to build a new assembly plant in Japan as it faces a projected ¥1.4 trillion tariff bill for importing vehicles to the U.S. this year. Despite the added cost, the company expects its full-year operating profit to decline by just a third, still forecasting a strong 6.6 percent margin and more than $22 billion in operating income. The decision to expand domestic production was described as a strategic move to safeguard Japan-based output at 3 million vehicles annually.

Honda is weighing a move to three production shifts at its U.S. factories, up from the current two, in an effort to boost output, offset tariff expenses, and avoid major new capital spending. The automaker said its delayed EV rollout and the impact of new tariffs cut operating profit in half for the fiscal first quarter that ended June 30. For the full fiscal year ending March 31, Honda expects to incur $1.3 billion in tariffs on imported vehicles and another $1.1 billion in duties tied to imported parts and raw materials such as steel, aluminum, and copper. Additional production on weekends is also under consideration as Honda evaluates how to increase volume.

Mazda posted a loss in the latest quarter as U.S. tariffs hit the import-heavy automaker hard, but CEO Masahiro Moro is aiming to return to profitability by year’s end through cost reductions, price hikes, new products, and a focus on delivering higher-margin vehicles to markets outside the U.S. The company expects to face ¥233.3 billion in tariff costs—about $1.61 billion—through March 31, 2026, though executives believe they can offset roughly 60 percent of that burden. Moro called the tariffs a major challenge, even after the rate on exports from Japan was recently lowered to 15 percent from 25 percent.

Photo Credit: Stellantis.