Detroit's three automakers could bear an additional $41.9 billion in annual costs from President Donald Trump's 25% tariffs on imported vehicles and parts, according to new estimates.

An analysis from the Center for Automotive Research in Ann Arbor, Michigan — commissioned by the American Automotive Policy Council, a Detroit Three advocacy group — creates a picture that could mean increased prices for consumers, the folding of already-distressed suppliers and reduced new-vehicle sales that still haven't recovered from the COVID-19 pandemic.

Contrast that with the narrative advanced by Trump and the strange bedfellow he's found on the issue in United Auto Workers President Shawn Fain. Trump says tariffs will increase U.S. production and investment, create well-paying manufacturing jobs and increase government revenues to decrease taxes and pay off debt. The UAW says stronger protectionist measures are needed because free trade has suppressed wages and benefits and sent jobs to places like Mexico, destroying manufacturing communities.

"Free trade has been the most harmful government policy of my entire work life — and most all of our entire work lives," Fain told UAW members in a livestreamed address on Thursday evening. "We have to end this free trade disaster."

Fain's remarks came a week after the Trump administration instituted 25% tariffs on imported vehicles, and there's more to come. The 25% tariffs on certain auto parts will take effect on May 3, which threatens to upend multinational supply chains built over three decades. The union president said while the UAW doesn't support some of the "random, reckless tariffs" levied on individual countries, it does view tariffs on the auto industry as a necessary first step toward revitalizing the American auto workforce.

CAR estimates a total of $107.9 billion in costs from tariffs for all U.S. automakers. It expects 6.8 million vehicles would be affected annually by the tariffs at General Motors Co., Ford Motor Co. and Chrysler parent Stellantis NV. Across the industry, that would increase to 17.7 million affected vehicles.

The UAW suggests the automakers can afford the tariffs. Fain accused automakers of price gouging while arguing there is "flexibility in the price" and that they don't need to pass along additional tariff costs to consumers.

"In 2023, we said record profits mean record contracts," said Fain, reprising familiar critiques. "Company executives said our demands to raise wages and end tiers would force them to raise prices. They said the industry would never survive. Turns out, the companies (were) lying. They could afford to do the right thing then, and they could afford to do the right thing now."

Ahead of Fain's remarks, GM and Ford said they did not expect to comment. In 2024, GM posted a net income of $6 billion; Ford made $5.9 billion; and Stellantis recorded a $5.8 billion net income — totaling $17.7 billion in profits, well shy of CAR's tariff-related cost estimates.

"Businesses are hardy and willing to take risks," K. Venkatesh Prasad, CAR's senior vice president of research and chief innovation officer. "But they're generally adverse to uncertainty. They're asking how do I distribute this? Let’s divide this up, and let’s do the lifting here."

That means shared costs across automakers, suppliers, distributors, dealerships and consumers, Prasad said.

Profits, prices and production

Anderson Economic Group, an East Lansing consulting firm, has projected the cost of a new vehicle could increase by $2,500 to $10,000 for most vehicles, $10,000 to $12,000 for large luxury vehicles and as much as $20,000 for ultra-luxury products from Europe or Japan. That could send some buyers to the used car market, increasing demand for that inventory, as well.

"A lot of buyers have price sensitivity," Prasad said. "They might decide (it's) maybe not a good time to buy or will buy a used car instead. That then creates a demand for used car prices."

It also decreases demand for new vehicles, which portends lower earnings for automakers. That means less profit-sharing payouts to autoworkers, too, which in recent years have reached into the low five figures.

In an analysis, AEG estimated the Detroit Three would see a reduction of about $5 billion in operating profits in North America for the rest of the year if the tariffs remain unchanged. It's estimated that it could reduce annual profit-sharing checks for autoworkers by $1,000 to $5,000. Those typically are paid out in February or March.

For 2024, GM hourly manufacturing workers received up to $14,500, an all-time record. Ford's payouts were approximately $10,208. Stellantis employees received around $3,780 after a hard-hit sales year — after receiving record payouts the year before.

Workers' individually compensated hours also affect the size of their bonuses, and tariffs have already affected production. Stellantis NV temporarily laid off 900 workers at components plants in Sterling Heights and Warren after idling its Windsor and Toluca assembly plants in Ontario and Mexico, respectively.

The automaker says it's assessing the impact of the tariffs and plans to keep Windsor down for two weeks and Toluca idled for the month. Those plants build the Chrysler Pacifica minivan, electric Dodge Charger Daytona muscle car, electric Jeep Wagoneer S and Jeep Compass crossover.

General Motors, on the other hand, said it was increasing production at a Chevrolet Silverado and GMC Sierra plant near Fort Wayne, Indiana, hiring hundreds of temporary workers.

Fain said it is this type of rapid scaling up of production that the UAW is pushing for in the near term as a response to the auto tariffs. He said that a decade ago, a dozen Detroit Three plants that are still in operation were making over 2 million additional vehicles annually than they are now.

"These plants still have that capacity right now," Fain said. "That's tens of thousands of jobs that we could bring back right now. Our research tells us that if the Big Three alone just got their currently active plants up to 100% capacity, they could add 50,000 jobs."

Fain said the union backs focused tariffs on the auto industry, and he also mentioned agricultural equipment, heavy trucks and aerospace as good candidates for focused tariffs. But he said tariffs should only be a first step to ending the "free trade disaster," with a renegotiation of the signature North American free trade agreement, updated labor policy, more government incentives, and Wall Street regulatory reforms all coming behind them.

Gov. Gretchen Whitmer, on a visit to Washington this week, raised concerns about the impact of tariffs on manufacturing.

"There are suppliers that are still trying to recover from inflation and COVID who are on the bubble and don't have the resources to weather this up-and-down, uncertain time where the rules keep changing," Whitmer said.

"And so I do worry that a lot of businesses won't make it if this goes on much longer," she continued. "I worry that big companies that are relying on those small businesses will pay a price as well."

Whitmer has been an ally of the UAW and received support from the union in her elections for governor.

"We'll lose some UAW jobs," she said. "And I understand the leader wants to try to be a part of the conversation. And he's a good guy. He's done some good things. But I think that the longer-term concern is the loss of UAW jobs, and the pain that's going to be inflicted in the short term."

UAW members divided on tariffs

For autoworkers like Christine DuShane, 39, of Toledo, Ohio, turning on the news right now can be "scary and disappointing." She's seen workers let go at her workplace at Stellantis' Toledo Assembly Plant, and she's seen production fall for the Jeep Wrangler SUV she helps build there. She knows it's heavily exported, and Canada already has slapped 25% tariffs on U.S. vehicles being imported in response to Trump's auto duties.

"I'm just nervous (about) the whole situation," DuShane said. "I think it’s going to make it worse and make it harder on American people to buy a car, which means we're going to be selling less cars."

Hearing about plant shutdowns makes her nervous, she said, noting that she and her family are basically living paycheck to paycheck: "They lose millions of dollars and can start up again, no problem. We lose a couple of paychecks, and we're pretty rough off. It’s a blow for the little man."

Some UAW members, however, hope the trade policies will bring about change. Irene Guzman, 44, of Detroit, has seen hundreds of her coworkers go on layoff at Warren Truck Assembly Plant, which builds the Jeep Wagoneer SUVs and formerly the Ram 1500 Classic pickup. Meanwhile, the company announced that overflow production of the latest-generation Ram 1500 was going to Mexico.

“I’m for the tariffs,” Guzman said. “We built the Ram. We know the Ram. I get it from a business standpoint, I see where they are coming from, but for my livelihood, we could benefit from building it. We’re fixing it anyway. We’re doing the repairs. Why not allow us to do the overflow?”

Tariffs increase prices, she added: “We’re going to feel it regardless. But at least give the opportunity to make the money.”

Reassessing manufacturing footprints

Companies can look at offsetting increased costs, but that is easier said than done, Prasad said. An identical part to one made in Mexico, Canada, South Korea, China or Europe might not be manufactured in the United States.

"You just had a shock," Prasad said. "They're just trying to figure out: Where do we go next? You can move it here and onshore, perhaps they can add another shift or something along those lines, but there has to be an alignment of stars."

If not, it can be months or even years to retool a plant and even longer to build a new site. Those are long-term investments, Prasad said, that outlast presidential and congressional terms and are made based on decades-long business value.

The most likely scenarios are when there already are plans for new production or retooling, Prasad said. A company might opt to start one project before another. He pointed to Hyundai Motor Group's decision to invest $5.8 billion in a new steel manufacturing facility in Louisiana as an example.

"Capacity exists in pockets by which we mean there could be an assembly line that certainly could be cranked up to support more production, or two shifts becomes three shifts," Prasad said. "Doing that is not as easy as it might seem at first glance. You have to rethink through your product mix."

(Grant Schwab contributed.)

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