President Trump’s latest round of tariffs is creating quite a stir in the auto industry, with concerns that these new levies could severely impact the earnings of major car manufacturers like General Motors, Ford, and Stellantis. Barclays recently underscored these potential repercussions. As of Tuesday, a hefty 25% tariff applies to goods imported from Canada and Mexico, complemented by an extra 10% levy on Chinese imports. In reaction, these countries are poised to hit back with their own tariffs.
Dan Levy, an analyst, highlighted that while a universal 25% tariff on vehicles or components from our northern and southern neighbors is obviously disruptive, its full impact might be underestimated. He insisted that without any countermeasures such as price adjustments or changes in production plans, these tariffs might erase essentially all profits for these prominent automakers.
On that same Tuesday, the effects were evident in the stock market, with General Motors’ shares tumbling nearly 4%, Ford slipping over 2%, and Stellantis dropping above 4%. For the year so far, this puts losses at over 14% for GM, more than 7% for Ford, and a bit over 9% for Stellantis.
Levy went on to warn about potential future market volatility, stressing that the uncertainty surrounding trade tariffs might linger until there’s a definitive resolution. However, he also mentioned that any significant dips in stock value could open up buying opportunities.
Levy pointed out that GM and Stellantis are most vulnerable due to their heavy reliance on Canadian and Mexican production for vehicles sold in the U.S. These two countries contribute to over 35% of their North American output, including many profitable truck models. Ford, on the other hand, would be somewhat shielded because it manufactures its high-margin vehicles within the U.S. Despite this, Ford isn’t completely out of the woods, as it still relies on parts from Mexico and Canada.
Levy further explained that for cars with about half their parts coming from these neighboring countries, the 25% tariff could result in additional costs ranging from $2,500 to $3,500. He believes that the potential for massive disruption underlines why such steep tariffs are hard to sustain in the long term.
