Tariff deals between the White House and foreign governments are trickling in, but the net effect of President Trump’s various trade wars are walloping the bottom lines of major automakers.

“Global carmakers, explicitly or implicitly, indicated US tariffs will cut their [2025] operating profitability by more than $30 billion,” Moody’s Ratings said in a report. “Though the companies' disclosure parameters differed, the guidance points to a tariff impact equivalent to more than one-fifth of the operating profit the same companies generated in 2024.”

Moody’s said tariffs would hit profit margins to the tune of 100-150 basis points. And with third quarter earnings season coming up, more disclosures are coming.

The guidance on tariff impact incorporates the framework trade agreement between the EU and US, as well as the trade agreement with Japan. While this does provide some certainty, Moody’s noted, deals between the US, Mexico, and Canada, where negotiations are stalled, are uncertain at best.

The trade deal between the US and Korea — home to Hyundai (005380.KS) and Kia (000270.KS) — also remains uncertain.

Mitigation efforts and solutions can be complex or ineffective.

“Automakers will continue to try to offset tariffs by reducing amenities in their vehicles and raising prices, which are less complex to implement and make more sense while the situation remains fluid,” Moody’s said.

Moody’s notes several automakers, including Volvo, Korea’s Hyundai and Kia, and even GM, have adjusted their production footprints and localized manufacturing to tackle tariffs.

GM said it will spend $4 billion in additional investment to increase manufacturing volume and add new vehicles to its US manufacturing.

But this also has its drawbacks.

“Implementation of these more structural mitigation measures take an extended period of time and likely require additional investments by automakers and their suppliers,” Moody’s said.

With third quarter earnings season coming up, automakers will disclose updated metrics on how bad the tariff pain has become.

A prior Yahoo Finance analysis found that the cumulative tariff hit from the largest automakers following the end of the June quarter stands at around $11.7 billion, per automakers' financial disclosures. Toyota (TM) had the largest exposure, followed by Volkswagen (VWAGY), GM (GM), Ford (F), Honda (HMC), and others. China's top automakers were excluded from the list as they do not operate in the US.

Even Tesla (TSLA), which makes all of its vehicles in the US, had a significant tariff impact from duties on auto parts like batteries for EVs. Following its second quarter earnings report, the company said the cost of tariffs increased by around $300 million, with the full impact set to come through in the later quarters.

Localization of production and supply chains will be key, and potentially expensive.

“We expect that as automakers gradually gain clarity over future tariff levels, they will continue assessing and implementing more long-term structural measures, such as adjusting supply chains and production footprints,” Moody’s said.

Pras Subramanian is Lead Auto Reporter for Yahoo Finance. You can follow him on X and on Instagram.

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