Trump s 25% Auto Tariffs : Car stocks don’t just seem to be defying the looming threat of new tariffs. There are a few reasons for that, but investors should weigh whether a change is ahead as President Donald Trump’s threat likely turns reality in a few weeks.President Donald Trump suggested on Tuesday that auto tariffs could be as high as 25%. Trump had threatened 25% tariffs on imports from Canada and Mexico in the future. The rest of the auto industry seems to be getting swept up in his plans.
That’s bad news for German and South Korean automakers. To a degree, it’s best for Ford Motor.Volkswagen imports roughly 80 percent of the vehicles it sells into the U.S. — per Bloomberg. Hyundai Motor and Kia account for some 65%.Following them for tariff exposure in the U.S. are Mercedes-Benz and BMW, around 63% and 52%, respectively.
Toyota Motor and Honda Motor, both Japanese auto makers, import about 51% and 35% of sales, respectively.General Motors and Stellantis import about 45 percent of the cars they sell in the United States, and Canadian and Mexican output are why those figures appear high. For the last 30-plus years, car companies have treated North America as one big, happy free-trade zone.
Ford imports roughly 20 percent of the cars it sells in the U.S. Tesla imports none; it builds cars for the U.S. market in Fremont, Calif., and Austin, Texas.As it turns out, tariff exposure hasn’t been the only explanation for recent stock performance. Through Tuesday’s trading and since the
Nov. 5 election, shares of Volkswagen, BMW and Mercedes were up 14% on averageToyota’s U.S.-listed American depositary receipts have risen about 5% since the election, while shares of Kia, Hyundai and Honda were down 5% on average. GM and Ford shares are worse, down 10% and 12%, respectively. Tesla shares have soared roughly 41%.
Ford has been the weakest, although it has a relatively strong U.S. manufacturing base. There’s more to car investors than tariffs, though, and Ford’s fourth-quarter earnings report in February wasn’t a particularly glowing one when it came to guidance. Ford and GM also derive a larger share of their profits from the U.S. than other auto makers, so any U.S. disruption hits them harder.
Nevertheless, there is probably going to be some performance convergence in the group, particularly if new Trump tariffs affect cars no matter what be their country of origin. The U.S. is a key market for all. That makes it kind of like the second-biggest new-car market in the world, behind only China. That doesn’t guarantee Ford and GM shares will bounce back, however. Ford Chief
Executive Jim Farley has said tariffs could eliminate billions of dollars in industry profits. Barron’s has previously projected that tariffs could drive up the price of a new car by 4% to 10%. We’ve also noted that car pricing involves more than tariffs. Supply and demand could also help keep prices more stable while taking a bigger bite out of auto makers’ bottom lines.
Not much fun in the car business over the prospect of new import levies. Tesla, as ever, is a unique situation. Its shares have risen despite some tariff-certain risk and also the possible removal of purchase tax credits for electric vehicles from the president’s agenda. But investors hope the closeness of CEO Elon Musk andTrump will pay off for the auto maker, most likely in the form of
policies speeding the rollout of self-driving cars. Self-Driving Robotaxis in 2025 GM shares fell 0.7% on Wednesday, while Ford shares gained 0.5%. Tesla stock rose 1.8%. The S&P 500 and the Dow Jones Industrial Average both rose roughly 0.2%.European auto makers fared worse in after-hours trading. Volkswagen, BMW and Mercedes dropped 2.8 percent, 2.3 percent and 1.7 percent, respectively.U.S.-listed ADRs of Toyota and Honda both fell about 2%. Shares of Hyundai fell 3.3%, while Kia was less impacted and rose 1.2%.