Impact of Trump’s Protectionist Measures on Automotive Industry
Since Donald Trump became the President of the United States on January 20 and implemented a 25% tariff on imported cars, auto parts, steel, and aluminum into the U.S. market, automaker stocks have been on a downward trend.
Key Players and Their Stock Performance
- Stellantis NV: The merged entity of Fiat and Chrysler has seen a 30.97% drop, trading at $8.67.
- Tesla: The electric vehicle manufacturer has experienced a 30.80% decline, currently trading at $295.14.
- General Motors (GM): The company’s stock has decreased by 6.87%, trading at $47.47 per share.
- Mercedes-Benz (Europe): The German automaker’s stock has fallen 6.79%, trading at €51.35.
- BMW (Europe): The luxury car and motorcycle manufacturer’s stock has dropped 0.54%, trading at €76.78.
- Ford (U.S.): The American automaker’s stock has risen 2.40%, trading at $10.26 per share, as 80% of its production is based in the U.S.
Expert Analysis and Future Outlook
Monex, Casa de Bolsa experts highlighted that the global automotive industry faces several trade and supply chain risks due to protectionist policies in the U.S.
“We believe that the growth balance for automotive industry activity has a downward bias, attributed to the U.S.’s protectionist policies impacting interdependent supply chains and particularly due to the slowing economy,” they explained.
Experts from Scotiabank’s Analysis area noted that adjustments were made in the U.S. during late April and May to limit tariff impacts on their economy.
- Multiple tariffs were combined into a single rate instead of cumulative ones.
- A refund program equivalent to 3.75% of the selling price was introduced for cars manufactured in the U.S.
- The 25% tariff on automotive parts imported from Canada and Mexico, which was set to take effect on May 3 under the T-MEC, has been suspended for two years.
However, analyst John Fanjoy from Scotiabank emphasized that significant uncertainty remains regarding future events and their potential impact on North American automotive supply chains.
“While these adjustments provide some relief to the automotive sector compared to earlier announcements, there is still considerable uncertainty about future developments and their possible effects on North American automotive supply chains,” he wrote.
Analysts from Banamex stated that while the tariff hit in the U.S. market would be less severe than in other countries, Mexico would lose competitiveness compared to U.S. producers.
“Half of the cars sold in the U.S. are imports, and the other half are locally produced. We can assume that most tariffs will be passed on to consumers and that imports from other countries might be substituted by local production rather than those from Mexico and Canada,” they said.
Banamex analysts also pointed out that Mexico might lose investments directed towards the U.S., given Trump’s persistent tariff policy, which they believe would negatively affect both U.S. consumers and manufacturing efficiency.
