Impact of Proposed Auto Tariffs
Former President Trump announced plans to implement tariffs “in the neighborhood of 25%” on imported automobiles, potentially starting April 2nd. The announcement didn’t specify which countries would be affected or any potential exemptions.
Last year, the United States imported a substantial $279 billion worth of passenger vehicles, trucks, buses, and specialized vehicles, according to the Commerce Department. An additional $192 billion in parts were also imported.
The market’s response so far has been less dramatic compared to earlier this month. At that time, auto stocks initially fell before recovering, prompted by news of tariffs on goods from Canada and Mexico, later delayed by the White House. Currently, shares of major automakers like General Motors, Ford, and Toyota are fluctuating in the low single digits.
GM’s Chief Financial Officer, Paul Jacobson, said the company would consider relocating its factories if the tariffs become permanent, though no official decisions have been made. “Those are questions that just don’t have an answer today,” Jacobson stated. “I can tell you, as much as the market is pricing in a big impact of tariffs and lost profitability, think about a world where, on top of that, we’re spending billions of capital, and then it ends.”
