Coming into 2025 the business for roll on/roll off ships, better known as Ro/Ros, was rolling along. Now with levying of tariffs, other regulatory uncertainties and questionable economic conditions, collectively impacting the Ro/Ro carriers’ principal source of income, the transport of autos and other vehicles, the road ahead looks a great deal bumpier.
Coming into 2025, the global auto industry had reasons to be optimistic. After all, the new–car market sales had risen to pre-pandemic heights, and the U.S. economy was purring along like a well-tuned automobile.
But in February 2025 the auto sector, and particularly the outlook for Ro/Ros, drastically changed as the Trump Administration let loose a double whammy on the auto industry and its supply chain — in which Ro/Ro carrier services represent the longest and often most costly links in the chain. In a sense the Trump administration’s combined moves were the economic equivalent of getting rear ended and then slamming into the car in front of you.
February 1st EO and Automakers
It all started with President Trump’s executive order (EO) on February 1st, 2025, placing tariffs on imports from Mexico and Canada at 10% [both key contributors to US auto manufacturing] and a 25% tariff on imports from China [also a key contributor of auto parts and importer of Tesla EVs]. From that point on there has been a regular flurry of EO tariff announcements emanating from the White House, peaking with the extensive global tariff blast on so-called “Liberation Day” April 2, 2025, with EO 14257, which tanked stock markets around the world. Naturally, the US tariff offensive has been met with knee-jerk retaliatory tariffs issued by nearly every US trade partner leaving a confusing landscape for automakers and others involved in the industry to negotiate.
At this writing, much is in flux as the question of which tariffs can be levied through EOs is being challenged and appears destined for a date with the US Supreme Court. However, there is considerable data on the impacts that the tariffs would have on automakers and the auto industry as a whole should the tariffs be applied.
The Center for Automotive Research, appropriately and better known as CAR, issued a report in April entitled, “Tariff Impact Analysis on Automakers in the United States” with a subhead of “25% Tariffs — Imported Auto Parts and Light Vehicles”. The independent auto think tank applied the analysis to what the dollar impact of the “25%” would be based on production figures from 2024.
According to CAR, the total cost to light vehicle production would be $43 billion with an average cost per vehicle of $4,239. The impact on the US auto industry of imported vehicles would be $64.7 billion with an average tariff cost of $8,722. Overall, the 25% tariff would cost the US auto industry $107.7 billion with increased production costs associated with imported parts, $43 billion and increased vehicle costs, another $64.7 billion.
To put this in perspective, the $107.7 billion in increased cost is against a projected US automaker’s total revenue of $326.2 billion for 2024. In other words, the increased costs from tariffs represent about 33% of the estimated total revenue for US automakers in 2024.
And while the goal of the car tariffs is to aid US automakers, it is worth noting that auto manufacturing is a “global” enterprise and as the CAR study writes,
“A U.S. domestic vehicle, comprised of 100% domestically-produced content, does NOT currently exist. United States-produced vehicles have foreign parts content ranging from 20% to 91%, according to American Automobile Labeling Act (AALA) data.”
April 29th “Adjustment” Proclamation & Auto Costs
Of course, the tariff costs for US assembled vehicles vary dramatically depending on type and imported part content. And the question in 2025 is whether US auto buyers will continue to buy cars — as they have done coming out of the COVID-19 pandemic at higher prices?
The Anderson Economic Group (AEG) in May released a report analyzing the “adjusted” auto purchase costs under the Administration’s April 29th proclamation. The AEG grouped US assembled autos into three groups separated by the estimated tariff costs under the April adjusted policy:
- Lower Impact Group–Reduced Tariff Costs: For certain vehicles assembled in the United States and with substantial U.S. content, we estimated tariff cost burdens of $2,000 to $3,000. The Honda Civic and Honda Odyssey, Chevy Malibu, Toyota Camry Hybrid, and Ford Explorer were in this group.
- Medium Impact: Many vehicles will have an estimated tariff impact of between $4,000 and $8,000. Some Jeep and Ram truck models are in this category, as are the Chrysler Pacifica van, BMW X3, the Ford Bronco Sport, and the VW Jetta. With the adjusted policy, some Texas-assembled Chevrolet Suburban/GMC Yukon vehicles will have a tariff impact we estimate at just under $8000.
- High Impact: Higher on the tariff impact list are full-size luxury SUVs, some BEVs, and products assembled in Europe and Asia. These vehicles are expected to see a tariff impact of $10,000 to $12,000, with some battery-electric vehicles and European and Asian luxury vehicles having an estimated tariff impact exceeding $15,000. Models in this group include Mercedes G-Wagon and other Mercedes sedans, Land Rover and Range Rover models, some BMW models, and the Ford Mach-e.
Patrick L. Anderson, who was the principal author of the report wrote, “The adjustments provide significant and beneficial softening of the cost impact of these tariffs, at least for US-assembled vehicles. However, the cost is still substantial for most American cars and trucks. We do not expect consumers to absorb tariff costs that are still above $4,000 for many models, and above $10,000 for luxury vehicles imported from Europe and Asia.”
So, the question going forward, will tariffs not only discourage auto imports to the US but demand for US [mostly built] built autos?
The latest Cox Automotive Dealer Sentiment (CADSI) might give a glimpse at the future direction of auto sales. According to Cox “The market outlook index – which measures expectations for the auto market in the next three months – dropped after two quarters of improvement, falling significantly from 58 to 45, landing just one point higher than year-ago levels. The score of 45 indicates the market ahead will be weak, not strong.”
Tuning the Economic Engine: Are Tariffs the Right Way to Go?
The overall goal of the administration’s tariff blitz is to re-balance the perceived imbalance in the auto trade. In the case of vehicles, the US imported an estimated 7.8 million units while exporting 2.5 million units. From the dollar standpoint, the US spent $216.8 billion on imported cars during 2024 and exported $59.2 billion worth of vehicles. Thus, in simplified terms the “auto deficit” in 2024 was $147.6 billion.
However, there are very few, if any, manufacturing industries, as globally intertwined as the auto industry. A car is a lot like a jungle with eco system of symbiotic parts contributing to the whole. And tariffs are a blunt regulatory instrument by any measure and especially when applied to a part-sourced heavy item like a car.
And like all the parts necessary to build an automobile, the industry itself is complex. And maybe a quick reminder of that complexity can be illustrated in a simple question. In dollar terms, who was the United States biggest exporter of vehicles in 2024? Was it GM, Ford or Stellantis (formerly Fiat Chrysler) — the BIG 3 of US automakers?
Perhaps unexpectedly, the US biggest auto exporter in dollar terms in 2024 was BMW as it has been for quite a while. The German-automaker’s plant in Spartanburg, South Carolina exported 225,000 BMWs Sports Activity Vehicles and Coupes in 2024 worth nearly $10 billion. And since 2014, the South Carolina plant has exported more than 2.7 million BMWs (or about 63% of the plant’s total production) with an export value of more than $104 billion.
So, will the administration’s tariffs redress the US auto imbalance or simply stifle US auto sales in 2025? With vicissitudes of the Trump tariffs’ policies, it’s a question that for now has no answer.
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