Automaker Stocks Dip as Trump Imposes Tariffs
President Trump's tariffs on goods from Canada and Mexico have sent automotive stocks tumbling. The tariffs, which will take effect tomorrow for Canada and in March for Mexico, will impose duties of 25% and 10%, respectively.
Big Three Automakers Hit Hard
Shares of General Motors (GM), Ford (F), and Stellantis (STLA), as well as rivals Toyota (TM) and Honda (HMC), all closed down at least 2% on Monday. The Mexico tariff delay provided some relief, but losses were still significant. Tesla (TSLA), despite producing no vehicles in Canada or Mexico, also saw its stock fall 5.2%.
Canada and Mexico's Automotive Contributions
Canada manufactures approximately 10% of cars sold in the US, while Mexico supplies close to 20%. GM produces pickups in all three countries, while Ford produces pickups and SUVs in Mexico for the US market. Stellantis builds minivans and EVs in Canada.
GM Plans to Mitigate Impact
GM, which recently reported earnings, said it will work to minimize the tariff impact. CEO Mary Barra noted that the company has production capacity in the US and can explore international sourcing options.
Auto Parts a Major Concern
Auto parts could be an even bigger issue. Mexico's auto parts industry hit $124.5 billion in sales last year, with over half destined for the US. Over 87% of Mexican-produced parts are exported, with the US being the primary market.
Higher Costs and Consumer Prices
Increased parts costs will likely raise prices for US-built automobiles, which will be passed on to consumers. Estimates suggest retail car prices could rise by up to $3,000.
Supply Chain Disruptions
The short notice for the tariffs leaves little time for suppliers and manufacturers to adjust, as parts often cross borders multiple times. The automotive industry cannot adapt quickly to such changes, as INA president Francisco González Díaz noted.