Prolonged tariffs on all auto imports into the U.S. along with tariffs on steel and aluminum will have a multi-billion-dollar impact on the earnings of North American automakers and suppliers, according to a report published by S&P Global Ratings. The report, “Tariffs Take The Wheel: Higher Prices, Lower Sales, Greater Risks For The North American Auto Sector,” forecasts higher vehicle prices, in the 5%-10% range, for consumers and reduced domestic demand, in the 15.2 million-15.5 million range for 2025 and 14.8 million-15.1 million range through 2026 compared to the prior estimates of 15.7 million-16.0 million. S&P Global Ratings also expects margin declines for most issuers along with high cash flow volatility in 2025 and 2026 for U.S. auto issuers, leading to credit deterioration particularly for some lower-rated auto suppliers.

“Based on these updates, we believe there is a greater likelihood there could be negative rating actions or outlook revisions,” said S&P Global Ratings credit analyst Nishit Madlani.”

Over the next few weeks, S&P Global Ratings will further fine-tune its issuer-specific forecasts to reflect the downside risks after incorporating likely mitigating actions, most notably the sustained ability and willingness to pass through costs to the end-consumer relative to peers.