Detroit automakers face billions in lost profits from tariffs on imports from Mexico announced Thursday by President Donald Trump, an assessment said Friday morning.

The Deutsche Bank industry update and analysts said General Motors is the most vulnerable, followed by Fiat Chrysler Automobiles and Ford.

Trump tweeted that he would impose escalating tariffs on Mexico "until such time as illegal migrants coming through Mexico, and into our Country, stop," seeking to pressure Mexico to block migrants fleeing Central America to seek asylum in the United States.

A 5% tariff will begin June 10, but would be removed if Mexico takes "effective actions" to alleviate the "illegal migration crisis," which will "be determined in our sole discretion and judgment," Trump said in a separate statement issued by the White House. However, "if the crisis persists" tariffs will increase to 10% on July 1, Trump also said in the statement, and increase monthly until they reach 25% on Oct. 1.

"Tariffs will permanently remain at the 25% level unless and until Mexico substantially stops the illegal inflow of aliens coming through its territory," the White House statement said.

The tariffs would fall hard on the auto industry, which accounted for 26% of the $350 billion in U.S. imports from Mexico last year. Deutsche Bank warned that the impact on the U.S. auto industry would be particularly substantial.

"Automakers may indeed see large financial impact and uncertainty from the tariffs, as all major (automakers) import a considerable portion of the vehicles they sell in the U.S. from Mexico; they also use large content imported from Mexico in the vehicles they produce in the U.S.," Deutsche Bank said in an industry update.

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"But U.S. automakers would be worse off than the Japanese and Korean (carmakers), particularly GM and FCA. We believe the high volume/content of full-size pickup trucks manufactured/sources in Mexico and sent to the United States may surprise investors who typically think the only real exposure is passenger cars," Deutsche Bank said.

The update estimated that if the automakers absorbed the full cost of 25% tariffs, the potential annual profit hit would be on $3.3 billion for Ford, $6.3 billion for GM and $4.8 billion for FCA.

Passing the costs on to consumers would raise the price of vehicles roughly $2,400 for GM, $2,200 for FCA and $1,600 for Ford, Deutsche Bank said. Factoring in foreign brands, the average consumer price increase is calculated at $1,300 per vehicle.

It said the tariffs could cut U.S. vehicle sales by 3 million as the industry already faces a moderate downturn.

"With the U.S. auto market already softening, and all the tariff impacts that have already been imposed, this additional layer of tariffs will only further weaken U.S. automakers and suppliers as they are concurrently are being weakened by lower sales volumes,” said Jon Gabrielsen, a market analyst who advises automakers and suppliers.

He pointed out that U.S. sales the past three years have been at a peak above 17 million, but in April were at an annual rate of about 16.5 million. A loss of 3 million for a full year would cut sales about halfway to the Great Recession low point of 10.6 million in 2009.

Industry reacts

Several U.S. automakers deferred comment to the American Automotive Policy Council, which said: "We are strong supporters of the administration’s United States Mexico Canada Agreement because it makes significant improvements to the NAFTA, but it relies on duty free access to be successful. The imposition of tariffs against Mexico will undermine its positive impact and would impose significant cost on the U.S. auto industry."

John Bozzella, president and CEO of Global Automakers, an industry group representing foreign automakers operating in the United States, said the tariffs would cost consumers money and endanger jobs.

“Threatening to increase taxes on products American consumers and manufacturers buy from Mexico will raise costs and quickly threaten the jobs of tens of thousands of Americans here in the United States," he said. "Rather than solving problems at our southern border or improving the environment for passage of the president’s recently negotiated USMCA, these new proposed tariffs only increase the uncertainty already faced by American autoworkers and other manufacturers.

“An integrated North American automotive market has been key to the success of automotive production in the United States. Threatening to increase costs on American manufacturers and consumers will hurt American jobs and raise prices — without solving the problem they were intended to address.”

Another industry group, the Alliance of Automobile Manufacturers, which represents about a dozen automakers, including the Detroit Three, Volkswagen and Toyota, said that tariffs are a tax on consumers and hurt the economy.

"The auto sector — and the 10 million American jobs it supports — relies upon the North American supply chain and cross border commerce to remain globally competitive. This is especially true with auto parts, which can cross the U.S. border multiple times before final assembly," Alliance interim President and CEO Dave Schwietert said in a statement. "Any barrier to the flow of commerce across the U.S.-Mexico border will have a cascading effect — harming U.S. consumers, threatening American jobs and investment, and curtailing the economic progress that the administration is working to reignite as efforts are underway to pave the way for ratification of the agreement in Mexico, Canada, and the U.S. Congress."

A Honda executive offered his take on the tariffs during a scheduled speech in Detroit.

“This is more than a Honda problem. It’s an auto industry problem,” Honda Senior Vice President Henio Arcangeli said, speaking to the Automotive Press Association. “We’re very hopeful the Mexican and U.S. governments can work through this and get back to business as usual.”

Honda builds about two-thirds of the vehicles it sells in the U.S. domestically, but like most automakers, imports some vehicles and relies heavily on parts from Mexico.

Just two weeks ago, Trump lifted tariffs on steel and aluminum imported from Canada and Mexico, seen as a key step in winning approval in Congress and Canada of the U.S.-Mexico-Canada Agreement meant to update the North American Free Trade Agreement.

White House chief of staff Mick Mulvaney said the new tariffs were “completely” separate from USMCA because one pertained to immigration and the other trade, the Associated Press reported.

But the threat drew a withering response from Republican Sen. Chuck Grassley of Iowa, a usual Trump ally, who slammed it as “a misuse of presidential tariff authority” that would burden American consumers and “seriously jeopardize passage of USMCA.”

Trump also has threatened to impose 25% tariffs on vehicles imported from Europe and Japan, contributing further to uncertainty in an industry that plans billions in investments in products and manufacturing years in advance.

"As significant as the impact may be of ever-changing and increasing tariffs, the huge and most pervasive issue is the never-ending uncertainty it drives," Gabrielsen said. "Automakers and suppliers need to have relative certainty about the economic and trade tariffs environment between all countries in the world on a time horizon of five to 10 years into the future. But right now, no one can tell any of us what it will be from now until the end of business this today."

Jessica Caldwell, executive director of industry analysis at Edmunds.com, said the uncertainty is magnified because the administration has not provided an achievable and measurable objective for the Mexican government.

"In terms of what does success look like, that hasn’t been defined. What exactly is he looking for?" asked Caldwell, noting that operations at the border are massive. "In 10 days' time, what is supposed to occur for (the tariffs) not to happen?"

Vehicles made in Mexico

Cox Automotive Chief Economist Jonathan Smoke, in a piece published on the company's website in April, noted that most vehicles assembled in Mexico come from American brands.

"In 2018, Mexico assembled 2.5 million vehicles that were sold in the U.S. Of those 'Mexican vehicles' sold in the U.S., 57% were domestic makes. Two of these 'domestic' makes — General Motors’ GMC brand and Fiat Chrysler’s Ram brand — see about 40% of their U.S. sales coming from vehicles actually assembled in Mexico," according to Smoke.

He noted that 41% of the rest of the vehicles assembled in Mexico and sold in the United States are from foreign automakers with "substantial manufacturing in this country.

"These brands are Volkswagen, Nissan, Toyota, Honda, Mazda, Infiniti, Kia and Hyundai. In fact, 15% of the total U.S. sales from these foreign makes come from vehicles assembled in Mexico. Two-thirds of the Volkswagens sold in the U.S. last year were assembled in Mexico," Smoke said, noting that "these vehicles otherwise considered American, Japanese, German and Korean likely have a larger percentage of content coming from the U.S. from their related factories based in the U.S."

Dingell, Peters criticism

U.S. Rep. Debbie Dingell, D-Dearborn, called the president's latest tariff plan absurd.

“Tariffs are economic tools used to balance trade. Immigration policy is about humanitarian needs of those fleeing violence and war, as well as ensuring farmers, the hospitality industry and businesses get the workers they need.

"Our immigration system is broken but we don’t need tariffs to fix it — we need tough, effective border security, permanent protections for Dreamers, and humane policies that don’t tear families apart. Tariffs are threatening the very trade deal the president is trying to pass," Dingell said.

U.S. Sen. Gary Peters, D-Michigan, also expressed concern.

“I’m concerned about the impact of the president’s proposal on Michigan workers and our auto industry. It’s unclear how this will strengthen security at the southern border and it does nothing to address the root causes that are driving migration from Central America,” Peters said.

Auto stock prices reflected the concern at midday Friday, with GM down 4.3% at $33.31; FCA down 5.1% at $12.72; and Ford down 2.6% at $9.48. Overall, the Dow Jones Industrial Average was down about 1%.

Trump tweeted Friday that tariffs will either force Mexico to crack down on immigrants passing through its territory or lead companies to move production to the United States.

Contact Eric D. Lawrence: elawrence@freepress.com; follow @_ericdlawrence. Free Press staff writers Jamie LaReau, Mark Phelan and Phoebe Wall Howard contributed to this report.