What expansion of steel, aluminum tariffs mean for auto

An expansion of steel and aluminum tariffs could push costs up for auto manufacturers and retailers, many of whom already expect a hefty cut to profits this year. President Donald Trump ’s administration is implementing steel and aluminum tariffs on products not included in previous tariffs, according to an Aug. 18 notice from the Bureau of Industry and Security , a division of the U.S. Department of Commerce . The expansion comes after several auto manufacturers had already revised their expected tariff impact during recent second-quarter earnings calls, with some saying it would be as high as $5 billion. The additional products could contribute to higher vehicle prices and limits on U.S. car production. Price increases on horizon? Auto industry experts are still ironing out a game plan for tariffs, but agree that higher prices are inevitable, and some say this could lead auto manufacturers to limit their U.S business. “We're still digesting what the tariffs are going to mean and how are they going to play through,” Jim Murray , president of subprime lender Western Funding , told Auto Finance News . New-vehicle prices could rise and push up used-vehicle prices as demand increases, as happened during the pandemic, he said. Much of Western Funding’s portfolio is made of loans for used vehicles, often several model years old with plenty of miles on them, he said. Those vehicles “shouldn't go up in value that much,” Murray said. “And if it starts to, that's probably not a really good sign, and we should take that into account.” Murray detailed a likely scenario that could play out in four steps: Tariffs get passed onto consumers; Prices rise ; Used-vehicle demand and prices increase ; and Lenders likely take precautions and tighten their underwriting programs. Mark Jansen , an assistant professor of finance at University of Utah who focuses on auto lending, also expects vehicle price increases from manufacturers assembling vehicles inside and outside of the United States. “If the past is any indication, what we'll see is that U.S. manufacturers will raise their prices and enjoy higher margins,” he said. “If the past is any indication, what we'll see is that U.S. manufacturers will raise their prices and enjoy higher margins.” -- Mark Jansen, assistant professor of finance, University of Utah However, some manufacturers may stop selling in the U.S. or limit what products are sold in the country, Jansen said. “For people that are making cars in the U.S., you can expect those prices to rise because of supply and demand,” he said. Tariff notice breakdown The Bureau of Industry and Security added 407 Harmonized Tariff Schedule of the United States (HTSUS) codes, to an already lengthy list of steel and aluminum derivative products subject to tariffs. The agency withheld 60 steel and aluminum derivative HTSUS codes from the amendment because they are covered under other tariffs. Other exceptions include imported derivatives of iron or steel that fall under the HTSUS that were melted and poured in the U.S., even if they were admitted into a foreign trade zone under “privileged foreign status,” the notice said. Manufacturers detail tariff impact Several auto manufacturers shared estimates of the tariff impact during recent Q2 earnings calls. Ford expects $2 billion to $3 billion of tariff headwinds in 2025; Stellantis updated its estimated tariff impact for 2025 to $1.7 billion; and General Motors reaffirmed its estimated fiscal year 2025 tariff impact of $4 billion to $5 billion. “GM has held prices relatively steady despite tariffs, choosing to absorb the additional costs while shifting some auto production to the U.S. and holding out hope for better trade deals with Mexico, Canada and South Korea,” Jay Cushing , senior bond analyst at bond research firm Gimme Credit , told AFN . Other manufacturers have also opted to eat the tariff losses and deploy incentives to preserve consumer demand. However, “given existing vehicle affordability issues, we remain skeptical that volumes can be sustained at current levels without discounted pricing, particularly if the economy slows,” Cushing said. [caption id="attachment_58354214" align="alignnone" width="1024"] (Courtesy/ChatGPT)[/caption] Investors seem unfazed Investor confidence was temporarily shaken, as evidenced by slight dips in shares of OEMs and major auto retailers during intraday trading on Aug. 18 following the announcement of the expanded tariffs. Unlike the shockwave in auto stocks following the passage of One Big Beautiful Bill prior to Independence Day, most stocks closed relatively flat or with slight increases from market open. According to Yahoo Finance , on Aug. 18 shares of: Asbury Automotive fell 0.05% from market open to a low of $239.07 but closed with a 0.33% gain at $240.44; AutoNation was flat from market open with a low of $205.26 but closed with a 0.5% gain at $207.18; Carvana fell 0.37% from market open to a low of $349.19 but with a gain of 2.6% at $359.51%; Group 1 Automotive fell 0.81% from market open to a low of $439.39 but closed with a gain of 0.6% at $445.79; Hyundai was flat from market open with a low $2,301.20 but closed with a 5.3% gain at $2,423.40; Lithia Motors fell 0.74% from market open to a low of $300 but closed with a gain of 0.77% at $304.57; Tesla fell 0.01% from market open to a low of $329.59 but closed with a gain of 1.68% at $335.16; and Toyota fell 0.17% from market open to a low of 195.67 but closed with a gain of 0.93% at $197.83. — Additional reporting by Aidan Bush Auto Finance Summit, the premier industry event for auto lending and leasing, returns Oct. 15-17 at the Bellagio Las Vegas. Learn more about the 2025 event and take advantage of the early-bird registration before Aug. 29 here .

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