Some of the world’s biggest carmakers are already facing serious challenges, and now they’re warning that President Trump’s proposed tariffs could make matters even worse.

These tariffs, set to go into effect on March 4, will hit imports from Mexico and Canada with a hefty 25% charge.

While Trump argues that the move will strengthen U.S. manufacturing and boost government revenue, automakers say it could drive prices up and hurt an already struggling market.

With new car prices already at all-time highs, the tariffs are a bitter pill for companies that are already seeing consumers pull back from purchasing.

Rising Car Prices and the Strain on Automakers

New cars are more expensive than ever, with the average price hitting around $48,000 in 2024.

And while some automakers are navigating the high-price landscape better than others, the proposed tariffs threaten to make things much harder for struggling companies.

The tariff could push prices on popular models even higher, making them less competitive and potentially sinking brands further into financial trouble.

Nissan, for example, has some of its most popular models, like the Sentra and Versa, produced in Mexico.

These models are some of the more affordable vehicles on the market, with base prices in the low-to-mid $20,000 range.

But a 25% tariff could erase the advantage these cars have in the market, leading to price hikes that could hurt their sales.

Nissan’s CEO, Makoto Uchida, recently pointed out that such tariffs would have a major impact on profits.

The company is already struggling—Nissan reported a $93.6 million loss at the end of 2024, which caused Moody’s to downgrade its credit rating to junk status.

Executives have warned that the brand may only have 12 to 14 months of cash left to keep going, leading them to explore merger talks with Honda.

But those talks have yet to result in any solid deals.

To avoid the tariffs, Nissan might move some production back to Japan, where the Trump administration has imposed fewer tariff threats.

Stellantis and Other Automakers Face Tough Times Ahead

Stellantis, the company behind brands like Jeep, Dodge, Chrysler, and Ram, is also feeling the pinch. It reported a 70% drop in profits last year, and many of its most profitable vehicles, like the Ram trucks and Jeep Compass, are made in Mexico.

The Compass, which starts at $26,900, had strong sales, increasing by 16% from 2023 to 2024.

But even so, Stellantis is worried about the potential for higher tariffs driving prices up and hitting their bottom line even harder.

While Stellantis’ executive chairman, John Elkann, says it’s too early to predict the full impact of the tariffs, he made it clear that the company believes trade policies between the U.S. and its neighbors should remain tariff-free.

This would help prevent further price hikes on cars and ensure that consumers aren’t hit with even higher costs.

How Other Major Brands Are Reacting

Other carmakers like GM, Ford, and Volkswagen also rely on Mexican and Canadian factories to produce some of their most popular models.

These companies are in a better financial position than Nissan and Stellantis—GM and Ford both reported sales growth in 2024.

However, the tariffs still present a risk to their margins, particularly on the cars made in those factories.

Wolfe Research analysts have forecasted that the tariffs could push the average cost of a new car up by around $3,000.

This could make an already expensive car market even less affordable for the average consumer, especially at a time when many are already tightening their belts.

Tesla: In a Stronger Position Despite the Tariff Threat

While the major legacy automakers are feeling the pressure, Tesla seems to be in a better position.

Elon Musk’s electric car brand produces most of its vehicles domestically, and with production facilities in Texas, California, New York, and Nevada, it’s less reliant on foreign imports.

That said, Tesla still sources parts like steel from international suppliers, which could also be impacted by the tariffs.

But for now, Tesla’s relatively domestic production puts it in a better spot to weather the storm.