GM, Stellantis shares fall after Trump’s auto tariff announcement

Auto Stocks Reel from Trump’s Tariff Announcement

Auto stocks are digesting President Donald Trump’s announcement that he would place 25% tariffs on "all cars that are not made in the United States," as well as certain automobile parts.

The President’s administration had been telegraphing plans to put tariffs on the auto industry, but the effect of those moves and mechanism for enforcement are starting to take shape. The President’s executive order said the tariffs would take effect for vehicles on April 3 and for auto parts by May 3.

Stock Market Reaction

General Motors stock was down about 8% in morning trading Thursday, while Stellantis lost nearly 4% and Ford Motor shares were down 2%. Shares of Tesla, however, were nearly 2% higher.

Exposure to Tariffs

"General Motors has the most exposure to Mexico," Deutsche Bank analysts wrote in a note Thursday. "In our coverage, for [original equipment manufacturers], Tesla and Ford appear to be the most shielded given location of vehicle assembly facilities although Ford does face incremental exposure on imported engines."

Tariff Details

The tariffs apply to imported passenger vehicles and light trucks, as well as key automobile parts including engines and transmissions, the White House said in a fact sheet. However, vehicles that are built in the U.S. will not be subject to the tariffs.

Auto Parts and the USMCA

Auto parts that are compliant with the United States-Mexico-Canada Agreement will remain tariff-free until the commerce secretary can consult with the U.S. Customs and Border Protection to figure out how to apply tariffs to non-U.S. content.

United Auto Workers’ Reaction

The United Auto Workers union cheered Trump’s announcement, saying it was a "major step in the right direction for autoworkers and blue-collar communities across the country."

Conclusion

The impact of these tariffs on the auto industry is still unfolding, but one thing is clear: the industry will be affected. As the details of the tariffs are worked out, it will be important to keep an eye on how the market reacts and how the auto industry adapts to these new regulations.

Frequently Asked Questions

Q: What are the tariffs?
A: The tariffs are 25% on imported passenger vehicles and light trucks, as well as certain automobile parts.

Q: Which companies will be affected by the tariffs?
A: General Motors, Stellantis, Ford Motor, and other automakers that import vehicles or parts from outside the United States.

Q: Will all vehicles be affected by the tariffs?
A: No, vehicles built in the United States will not be subject to the tariffs.