Automaker Stocks Decline Amid Trump's Tariffs on Canada and Mexico

Following President Trump's announcement of tariffs on goods imported from Canada and Mexico, automotive industry stocks experienced a decline on Monday. The tariffs, scheduled to take effect starting Tuesday, will impose a 25% duty on Canadian imports, while Mexican tariffs have been postponed until March. Trump's tariff plan also includes a 10% duty on imports from China and has indicated that tariffs on Europe are "definitely" in the works.

Impact on Big Three Automakers and Rivals

Major automakers General Motors (GM), Ford (F), and Stellantis (STLA), along with competitors Toyota and Honda, saw their stocks decline on Monday but regained some ground after the announcement of the Mexico tariff delay. Tesla, despite not manufacturing vehicles in Canada or Mexico, experienced a stock decline, likely due to its reliance on parts sourced from those regions.

Automaker Reliance on Canada and Mexico

Canada currently produces approximately 10% of vehicles sold in the US (around 1.5 million units), while Mexico supplies close to 20%, as per a report from TD Economics. GM manufactures the Silverado and Sierra pickups in the US, Mexico, and Canada, while Ford produces Mexican-made Maverick pickups, Bronco Sport SUVs, and Mustang Mach-E EVs in the US. Stellantis assembles the Chrysler Pacifica minivan in Canada and the Dodge Charger Daytona EV.

Minimizing the Impact

GM, which recently reported earnings, stated its efforts to mitigate the impact of tariffs. CEO Mary Barra mentioned plans to shift production capacity to the US from Mexico and Canada and explore sourcing from international markets.

Auto Parts as a Potential Concern

Automotive parts may pose a more significant challenge for automakers. Mexico's auto parts trade group INA estimates the industry generated $124.5 billion in sales last year, with over 50% destined for the US. A study by Alix Partners reveals that the combined parts and components business from the US and Canada was valued at $224 billion in 2024. Increased parts costs will result in higher prices for US-built vehicles, which will likely be passed on to consumers.

Timeline and Adjustment Concerns

The short notice given for the implementation of tariffs leaves suppliers and manufacturers with insufficient time to adjust their operations, as many parts are built in real-time based on demand. INA president Francisco González Díaz expressed the industry's concerns regarding the inability to adapt to such abrupt decisions in the short term.