2025 was not a great year to make money selling cars in America -- and tariffs were part of the problem.
With 2025 financial results now in, we know that the multiple rounds of tariffs announced by the Trump administration last year cost Ford Motor Company (F +0.12%) about $2 billion in lost profits and subtracted $3.1 billion from earnings at General Motors (GM 1.79%). Combined with charges taken to reverse some of its investments in the money-losing electric vehicle business, Ford racked up $8.2 billion in losses last year. GM did a bit better, earning $2.7 billion, but still, that was down more than 50% from the $6 billion the car company earned in 2024.
The good news is that despite their tariff woes and the impact on profits, automakers emerged from 2025 mostly unscathed -- and their stock prices actually soared, perhaps on hopes the tariffs would soon go away. Ford shares closed out the year up 35%, and GM gained a whopping 55%.
And now we learn that the U.S. Supreme Court has, in fact, struck down some of the tariffs that President Trump put in place last year. Does this mean that automotive stocks will continue to rise in 2026?
Not necessarily, no.
Image source: Getty Images.
There are tariffs, and then there are tariffs
The second thing you need to know is that tariffs come in many flavors. The ones the Supreme Court struck down last week were tariffs levied under the International Emergency Economic Powers Act (IEEPA) and justified by the president's concerns over fentanyl importation, immigration, and alleged trade imbalances. The Supreme Court ruled the president didn't have the power to enact these tariffs, and now they're going away.
Other tariffs remain, however, notably Section 232 tariffs enacted to preserve "national security." These imposed a 25% levy on imported automobiles and many imported automobile parts. Separate Section 301 tariffs imposed upon Chinese imports also remain in force. They'll continue to be a drag on automotive company profits this year, just as they were last year.
That's the bad news. But here's the good news -- and the third thing you need to know about President Trump's tariffs: The latest round(s) of tariffs President Trump announced, in response to the Supreme Court overturning his IEEPA tariffs, won't add to the auto industry's woes.
Last week, the president announced a new 10% Section 122 tariff, a 150-day "temporary import duty to address fundamental international payment problems." This tariff has already gone into effect, and the president has furthermore threatened to raise the amount to the statutory maximum of 15%.
That sounds bad -- and could be very bad if imposed on top of the 25% tariff already set by Section 232. But according to the president's announcement, the new Section 122 tariff(s) specifically exempt automobiles, auto parts, and several other products from their effect.
The upshot for automotive investors
For the time being, and until the president announces some new, as-yet-unthought-of tariff, it appears the 25% tariff is the main thing automotive investors have to worry about. Yes, it's a significant headwind. It did a great deal of damage to car company profits last year and will probably continue doing damage in 2026.
But at least it won't get worse.
