Mass layoffs are a common part of the cycle for a majority of large-scale businesses, so it’s no surprise that the auto industry is facing layoff predictions just like the world of tech. Some of these downsizing efforts are a part of the industry’s annual attempt to reorganize resources and cut out unnecessary expenses to tighten up the team, but in 2025, the auto industry job cuts are also being linked to the economic changes occurring across the U.S.
The US auto tariffs are predicted to be very impactful for many different reasons, and while they may eventually lead to local job creation in the future, the initial blow is not expected to be a pleasant one. Companies like General Motors and Porsche have already announced layoffs, and while not all of these cuts will occur in the U.S., the layoffs signal an economic downturn that might impact both business and customer.
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Auto Industry Layoff Predictions Make Many Nervous, What’s Next for the Industry?
Across the U.S. there has been a very encouraging push to support local businesses and build, manufacture, and grow companies within the country rather than bringing in products from outside. The more that jobs are localized, the better it will be for American workers. Unfortunately, the nature of the push is such that we may not see these jobs created for some time.
According to Autoweek and its conversation with the consulting firm Anderson Economics Group (AEG), the incoming tariffs are expected to add almost $12,000 in cost per vehicle, making it much more expensive for companies to produce and customers to buy new vehicles. On the lower end, the number could still be as high as $4,000.
The impact of the US auto tariffs is expected to be greater for automotive suppliers rather than automakers, but their experiences will likely affect the rest of the industry as well. Many are hoping USMCA compliance will be enough to help them avoid the 25% North American tariffs that are expected to go into effect on April 2, 2025, but it doesn’t appear likely that they will be able to circumvent it.
The automotive sector has already been challenged by lowered demands for their products and the confusing uncertainty between shifting to EVs or sticking to their gas-powered offerings. The number of layoffs last year should have guaranteed a more stable run in 2025, but this does not appear to be the case.
Impact of U.S. Auto Tariffs on the Industry
The proposed tariffs could raise production costs for automakers and reduce their competitiveness, leading to a drop in their production for years to come. If the price of American-made cars goes up, even in the international market, competitors could start to gain ground.
The retaliatory tariffs from other countries have also added to the strain on manufacturers within the US. The supply chain disruption is expected to bring up costs that need to be suffered by the automaker or passed on to consumers. These costs could be transferred to the consumer with hikes in price, but the already feeble appetite for the automotive industry’s offerings could fall further and diminish sales numbers beyond recovery.
With the auto industry’s layoff predictions currently in effect, companies may cut costs by firing workers, further weakening the general public’s purchasing power. The struggle to reorganize and resettle production at this juncture is also likely to slow progress on establishing a more effective EV market in the country. In the long run, this may also hurt the US companies and their standing in the EV market.
Auto Industry US Job Cuts Predicted in 2025
The tariffs aren’t the only reason the auto industry is facing layoff predictions for the year. The rise of the EV industry and competition from China have made things harder for US and European automakers, and car production is on the decline in the US overall. This means that companies will implement layoffs more actively this year.
While there are no concrete numbers for how many jobs will be affected, we know that General Motors laid off about 2,000 workers towards the end of last year and has plans to bring down $2 billion in costs to better meet its competition in the EV industry. These cost-cutting measures could result in layoffs. Reports suggest the company laid off around 26 workers at the Rochester plant on Lexington Avenue last month.
Ford Hints at Dire Consequences of Financial Aid Rollbacks
Ford is expected to be cutting stock bonuses to its 3,300 middle managers and CEO Jim Farley has previously stated that government cuts to the financial support for electric vehicle manufacturing could put many of the related jobs at risk within the US. It hasn’t provided an estimate of how many will be at risk at Ford, but the predictions are not ideal.
Stellantis is Looking at Buyouts in 2025
Another major automaker Stellantis has made a voluntary buyout offer to eligible employees at about 20 locations. The decision has been seen as one to incentivize older workers to move out so labor costs can be reduced and the workforce can be revived in a way that meets the company’s needs. There is no indication that this is due to the tariffs, and it appears to be a part of the company’s cycle to bring down production costs.
Tesla Has Not Announced Cuts But Its Position Weakens
Tesla, one of the most popular U.S.-based automakers, was predicted to be the biggest winner of the post-election period, however, this is far from the case. The company has faced falling demands, safety issues resulting in Cybertruck recalls, falling stock prices, and countrywide protests discouraging the purchase of its products.
Despite the company’s potential to capitalize on the Make-In-US efforts, it has failed to do so successfully. After the major layoffs that occurred last year, the continued economic struggles faced by the company could add to the predicted number of layoffs in the auto industry.
International Auto Industry Layoff Predictions
Volkswagen’s Porsche and Audi have also been considering job cuts, primarily in Germany. While this isn’t affecting jobs in the U.S., it still shows how layoffs are occurring as part of the economic downturn and how the impact on the auto industry will affect everyone.
The UAW Remains Optimistic About the Changes In the Auto Industry
Contrary to expectations, the United Auto Workers union (UAW), has spoken out in support of the tariffs as a way to undo the “injustice of anti-worker trade deals.” The organization believes that the corporate sector will have to take responsibility and the fall for the state the industry is in today and work to fix the erroneous systems that have been reinforced over the years.
“We look forward to working with the White House to shape the auto tariffs in April to benefit the working class. We want to see serious action that will incentivize companies to change their behavior, reinvest in America, and stop cheating the American worker, the American consumer, and the American taxpayer.”
The UAW appears certain that despite the tariffs the working class will be able to come out of this transition stronger. Despite many citizens, policymakers, and lawmakers being opposed to the new regulations, there is still clear support for the future that the government has envisioned for the US.
While Layoffs Loom, Not All Hope Is Lost
The auto industry is going to face job cuts, this much is apparent. However, after the number of cuts in 2024, the scale may not be as big and workers may not have to be the ones bearing the brunt of the tariffs. Negotiations are ongoing across industries and they could lead to some breaks for the automotive industry.
Additionally, the UAW’s optimism has been echoed by other industry experts who believe that the disruption to the industry will be brief and borne mostly by the corporate sector, after which jobs will flourish as more production is moved into the country.
This optimism might be underestimating how long it will take to relocate and establish production locally, but there is still some hope that the auto industry’s layoff predictions won’t be as dire as we expect.
Will tariffs reshape the auto industry for better or worse, and at what human cost? Let us know what you think. For more insight into how the world of HR is evolving, subscribe to The HR Digest.
