Impact of Tariffs on Auto Industry Stocks

Following President Trump's announcement of tariffs on goods from Canada and Mexico, the stocks of major automakers witnessed a decline on Monday.

Affected Automakers

* Toyota (TM): -2.79%
* Ford (TOYOF): -3.47%
* General Motors (GM): -3.15%
* Honda (HMC): -5.08%
* Hyundai (HNDAF): +0.44%

Tariff Details

* 25% tariffs on Canada, effective Tuesday
* 25% tariffs on Mexico, delayed until March
* 10% tariffs on China
* Potential tariffs on Europe

Impact on Vehicle Production

* Canada produces 10% of cars sold in the US, while Mexico supplies close to 20%.
* GM and Ford manufacture vehicles in Canada, Mexico, and the US, which allows for potential production adjustments.
* Tesla also faces supply chain disruptions despite not producing cars in Canada or Mexico due to sourcing parts from these regions.

Auto Parts Concerns

* Mexico's auto parts industry generates $124.5 billion in sales, with 52.3% destined for the US.
* 87% of Mexican-produced auto parts are exported, with the US as the primary market.
* A disruption in auto parts supply could significantly increase costs for US-built automobiles.

Consumer Impact

* Average US retail car prices could potentially rise by $3,000 if tariffs persist.
* The short notice given for the tariffs leaves little time for suppliers and manufacturers to adjust.

Industry Response

* The automotive industry has expressed concerns about the short-term impact of the tariffs.
* General Motors CEO Mary Barra stated the company is working to minimize the impact by shifting production to the US and exploring international markets.