Auto stocks are digesting President Donald Trump’s announcement of 25% tariffs on all foreign-made vehicles and certain auto parts. The President’s executive order specifies that tariffs will take effect on April 3 for vehicles and May 3 for auto parts.
General Motors’ stock dropped 8%, while Stellantis lost nearly 4% and Ford dipped 2%. However, Tesla’s stock rose nearly 2%. Experts from Deutsche Bank noted that Tesla and Ford are better shielded due to their vehicle assembly locations. “GM has the most exposure to Mexico,” they added.
The tariffs will affect imported passenger vehicles and light trucks, including critical parts like engines and transmissions. The White House clarified that auto parts complying with the United States-Mexico-Canada-Agreement (USMCA) will remain tariff-free. Further discussions are needed to determine how non-U.S. content will be handled.
The United Auto Workers (UAW) union supported the move. “These tariffs are a major step in the right direction for autoworkers and blue-collar communities,” UAW president Shawn Fain said.
Experts at S&P Global Mobility estimate vehicles contain an average of 20,000 parts, sourced from up to 120 countries. Goldman Sachs analysts predicted that the tariffs could increase the cost of imported cars by $5,000 to $15,000, and U.S.-made cars by $3,000 to $8,000.
