Japanese carmakers will benefit from a significant competitive advantage over American automakers like Ford, General Motors (GM), and Tesla.
The US companies will have to pay 50% on copper imports, 50% on steel, 25% on Canadian and Mexican production, and 55% on Chinese imports—leading to higher production costs and tighter profit margins.On the other hand, Toyota is subject only to a
15% increase, while domestic US companies bear the brunt of multiple, higher tariffs.This effectively gives Toyota a pricing edge, as its cost increases are far lower than those imposed on American automakers who rely heavily on imported raw materials and parts.
Copper tariffs, critical given copper’s role in electric vehicle (EV) manufacturing—especially in wiring, motors, and batteries—have hit US car producers hard. The new 50% tariff on copper, combined with existing steel and aluminium tariffs, is expected to add hundreds of dollars to the cost of manufacturing each vehicle.
Since US automakers source about 92% of their copper imports from countries like Chile, Canada, and Mexico, these tariffs critically strain supply chains and elevate costs.
Ford, GM, and Tesla, among others, now face a complex and costly tariff regime that increases the cost of production well beyond Toyota’s, prompting concerns that these US manufacturers are being disadvantaged on their home turf.
Market responses have been evident, with Toyota’s stock rising amid these market dynamics, while American automakers have struggled with negative investor sentiment due to the tariff-related cost pressures. The situation highlights how tariff policies designed to promote US manufacturing may ironically bolster foreign competitors who face lower effective duties.
First Published: Jul 23, 2025 9:36 AM IS
