As geopolitical and climate-related threats intensify, the world’s automotive giants are reassessing their global supply chains. Following the US-Israeli attacks against Iran and Tehran’s legitimate response, the potential closure of the Strait of Hormuz, the world’s critical oil and energy chokepoint, has driven sharp daily increases in commodity and logistics costs. At the same time, after Donald Trump was effectively cornered in the Strait of Hormuz following Iran’s response, US forces moved to encircle the waterway and warned that any vessel transiting the Strait after paying duties to Iran could face attack or seizure.
Economic analysts have therefore warned that major automotive brands and manufacturers must redraw their supply networks based on new post-crisis budgets and strategies in order to identify vulnerabilities and prevent further damage. In reality, US-driven tensions against Iran in this vital waterway are severely threatening the global automotive industry. The crisis has forced automakers worldwide into damage-control mode, pursuing policies ranging from layoffs to lower production targets and shrinking annual profits.
An analysis published by Ilkhan Ozsuyim on the AMS website (Automotive Manufacturing Solutions) argues that rising vehicle prices and disruptions in raw material supplies after the “third imposed war” are not limited to Iran alone. Rather, the tensions have become a double-edged sword threatening every major automotive brand worldwide.
For example, Toyota, the Japanese automotive giant and the world’s largest automaker, recently announced that its quarterly net profit for January through March 2026 fell 50% to JPY569.4bn ($3.6bn), citing the war against Iran, broader Middle East instability, and Washington’s 25% trade tariffs. Despite strong demand for hybrid vehicles, soaring fuel prices, high energy costs, and supply disruptions have heavily weighed on the profitability of major carmakers. In addition, intensifying competition from Chinese automakers has multiplied the pressure on executives across the industry.
Trump claims that “more than $100bn” in investment is currently flowing into the US auto industry. However, he has made no mention of the costs of these policies or the resulting rise in vehicle prices for American consumers. With tariffs climbing to 25%, the average purchase price of a vehicle in the United States could increase by between $3,000 and $10,000. Even Tesla CEO Elon Musk acknowledged that “this will affect the price of Tesla parts imported from other countries, and the impact on costs is not negligible.”
Germany’s Association of the Automotive Industry (VDA) described Trump’s move as “a fatal signal for the future of free trade.” Meanwhile, the European Automobile Manufacturers’ Association (ACEA) also broke its silence, warning about the “negative impact” of these policies on the global automotive industry, including on American manufacturers themselves.
The agreement reached last summer, whose provisions have yet to be ratified by the European side, is now effectively suspended. Europe’s response will depend on Brussels’ ability to coordinate negotiations and retaliatory measures within a timeframe compatible with the pace of Washington’s announcements. For Trump, tariffs are increasingly emerging, issue by issue, as the fastest tool in his diplomatic arsenal.
On May 1 of this year, Trump announced that tariffs on European automobiles would rise to 25%, up from the 15% rate outlined in last summer’s agreement. Many analysts see the move as retaliation against Europe for refusing to join the United States in military action against Iran. The main target of this pressure campaign appears to be Germany, which exported 445,000 vehicles worth $24.8bn to the United States in 2024.
Trump has accused several European partners of refusing to participate militarily in the Strait of Hormuz. His announcement casts doubt on the framework negotiated only months earlier. However, the European Commission has so far refrained from launching formal retaliatory measures and continues to favor negotiations and diplomacy to resolve disputes.
As oil prices surged following the closure of the Strait of Hormuz, consumers worldwide increasingly turned toward Chinese dealerships, attracted by more affordable electric vehicles. The trend has further intensified concerns among Japanese manufacturers.
Oil Above $100 and Spiral of Energy Costs
Although the Iran ceasefire briefly brought calm to the markets, the scars left by these tensions across global industries remain deep. The halt in fighting over recent weeks pushed oil prices lower and gave global markets fresh momentum on April 8. But for automakers grappling with aluminum shortages, soaring energy costs, and delayed investments, the road back to normal conditions is only beginning.
For manufacturers and factory managers, the negative consequences of the energy crisis are both tangible and enduring. Paint shops, foundries, molding lines, and surface-coating units had all operated before the war based on stable assumptions and predictable costs. Those calculations collapsed when oil prices surged to $112 per barrel, placing factories under severe pressure. Even now, despite lower prices during the ceasefire period, with oil fluctuating between $99 and $104, the gap between actual costs and previous estimates remains substantial.
In Europe, where industrial energy prices had already doubled even before the crisis began, there are still no signs of a structural return to pre-crisis conditions. Dutch TTF natural gas benchmarks remain sharply elevated, while the European Central Bank has forecast higher inflation for 2026 alongside weaker economic growth and lower GDP. An Oxford University economic model had already warned that both Britain and the eurozone were vulnerable to recession. The disruption in the Strait of Hormuz has now darkened that outlook even further for Europe.
Robert McNally, an energy analyst at Rapidan Energy Group, warned from the very beginning of the conflict: “A prolonged closure of the Strait of Hormuz means a certain global recession.” Today, that warning appears more realistic than ever.
Aluminum, Polymers, and Electric Vehicle Crisis
The consequences of the crisis for the automotive industry go far beyond higher fuel prices. Aluminum production infrastructure in the Persian Gulf — which supplies a significant share of the primary aluminum used in vehicle body structures, engine parts, doors, and transmission components — has suffered severe disruption. The US-Israeli attacks on Iran’s steel and petrochemical industries, carried out with the full backing of certain Arab states, not only damaged Iranian infrastructure but also triggered Iran’s legitimate response, further destabilizing the sector.
Among the hardest hit was Aluminum Bahrain (Alba), the world’s largest single-site aluminum smelter with annual capacity of 1.6mn tonnes, which cut production by 19% and declared force majeure on deliveries. Emirates Global Aluminium’s Al Taweelah plant in Abu Dhabi halted operations completely following Iranian missile and drone strikes on March 28.
Meanwhile, Qatar-based Qatalum, a joint venture between Norsk Hydro and Qatar Aluminium, was shut down following disruptions to Qatar’s energy infrastructure. Together, these three facilities account for roughly 570,000 tons of annual production capacity, much of which is now either suspended or sharply reduced. As a result, global aluminum prices have climbed to their highest level in four years.
Daniel Harrison, senior automotive analyst at Ultima Media, wrote: “The disruption in the Strait of Hormuz has not only driven up energy prices and disrupted supply chains; it has affected the entire value chain for automotive raw materials, from steel and aluminum to plastics, rubber, glass, semiconductors, and even helium used in electric vehicle battery production.”
Concerns over polymers are also mounting. Roughly 85% of Middle Eastern polyethylene exports pass through the Strait of Hormuz, while nearly one-third of global seaborne methanol trade depends on the same route. These materials are critical to the production of automotive resins, coatings, and plastics. Usha Haley, professor of supply chain management at Wichita State University, warned: “Product shortages and order backlogs will drive up the price of packaging, auto parts, and consumer goods.”
Yet the heaviest blow may fall on the battery electric vehicle sector. Synthetic graphite used in EV battery anodes is largely produced from petroleum coke, a byproduct of oil refining. When refineries prioritize more profitable outputs during periods of high oil prices, petroleum coke supplies shrink and the cost of synthetic graphite rises. At the same time, Qatar supplies around 30% of the world’s helium, a vital gas used for semiconductor cooling and EV battery cell manufacturing. Continued disruptions in helium supplies have intensified pressure on the electric vehicle industry.
Source: AMS – Automotive Manufacturing Solutions