The insight: Foreign automakers are feeling the heat following the full implementation of the Trump administration’s auto tariffs.

• Toyota expects tariffs to cost the company $1.2 billion over the next two months, which would make it one of the automakers hardest hit by the duties.
• Nissan now plans to lay off 20,000 workers—more than double its previously announced cuts—as tariffs add to the significant headwinds facing its international business.
• Mazda pulled its full-year guidance because of considerable tariff uncertainty—joining the likes of Ford, Stellantis, General Motors, and Mercedes-Benz.
• Mitsubishi is weighing price hikes as well as a potential manufacturing partnership with Nissan to offset the impact of tariffs.

The big picture: While President Donald Trump has publicly promised to stay firm on auto tariffs, the concessions offered to the UK in the recent trade deal could spark optimism among Asian and European automakers hoping for a similar compromise.

• Under that (yet-to-be-ratified) agreement, the UK can export 100,000 autos annually to the US with tariffs of just 10%—which is more than the country exported to the US last year.
• That move was blasted by America’s Big Three automakers, who noted that it would make it cheaper to import UK cars containing few US-made components than USMCA-compliant vehicles that are manufactured in Mexico or Canada and contain 50% American parts.

Such generous terms are unlikely for Japan and Germany, given Trump’s decision to single out Toyota by name during his “Liberation Day” tariff announcement as well as the highly contentious negotiations underway with the European Union. But that doesn’t erase the possibility of some concessions, particularly given the pressure on the White House to deliver comprehensive trade deals as quickly as possible.

Our take: Foreign automakers have limited options to deal with tariffs.

• Some, like Hyundai, are choosing to play ball by increasing US manufacturing—which in the long term could minimize exposure, but in the short term requires billions in investments at a highly uncertain time for the global economy.
• Others are in defense mode, raising prices and curbing US exports to help cover their losses.

Whichever route they choose, automakers face higher costs and softer demand.

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