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Moody’s says global automakers could lose about $30 billion in net profit in 2025 due to the Trump administration’s tariff strategy.

Profit margins are estimated to fall by 100-150 basis points as negotiations over trade terms with Mexico, Canada and South Korea are still in limbo.

Companies like GM, Hyundai, Kia and Volvo are cutting costs, raising prices and investing billions of dollars in assembly localization.

Moody’s has warned that President Donald Trump’s tariff conflicts could cost global automakers $30 billion in 2025.

According to the agency, car companies have openly stated or hinted that the new duties will eat up more than one-fifth of their 2024 operating profits. Moody’s Ratings indicates that margins will shrink by 100-150 basis points, and the financial damage will become more apparent when automakers report their third-quarter results at the end of the month.

The forecast takes into account Trump’s trade agreements with the EU and Japan, which provide only limited stability. However, negotiations with Mexico and Canada are stuck, leaving uncertainty over the future of the US-Mexico-Canada treaty.

Negotiations with South Korea, where Hyundai and Kia are headquartered, are also in limbo. Because of the delays, the companies cannot accurately plan future costs, production strategies and export restrictions.

automakers are trying to soften the blow of the duties, often resorting to simple methods that affect both their products and consumers.

Auto companies will continue to try to offset tariffs by cutting equipment and raising prices, which is easier to implement and more justifiable in a volatile environment, Moody’s Ratings said in a statement. Simply put, buyers are likely to pay more for less, and automakers realize that.

Some major players including Volvo, Hyundai, Kia and General Motors (GM) are already rebuilding production lines and localizing assembly to reduce the impact of tariffs. GM has said it plans to invest another $4 billion to expand U.S. production and add new models to its domestic lineup.

But Moody’s warns that such steps require costs: Implementing more structural measures to reduce tariff pressure will take a long time and will likely require additional investment by car companies and their suppliers.

This means that while firms may reduce some of the pain of duties in the long run, they are incurring significant costs now. Each new investment postpones the return on capital and reduces the funds that could be spent on electric cars or R