The United States is preparing to implement a new 25% tariff on imported passenger vehicles, light trucks, and key auto parts—including engines, transmissions, and powertrain components—starting April 3rd. This move is expected to ripple across several industries, impacting not only foreign automakers but also parts suppliers, car dealerships, and even U.S.-based companies with international operations.
Here's a breakdown of which stocks and sectors could be most affected by the new tariffs:
Foreign Automakers: The Most Directly Affected
Foreign car manufacturers are expected to be hit the hardest, especially those that import large volumes of finished vehicles and parts into the U.S. Analysts predict vehicle prices could rise by $4,000 to $15,000 per car, with an average increase of about $6,700.
Stocks to watch:
- Toyota (TM) – Manufactures vehicles in Japan and Canada; stock performance already reflecting the pressure.
- Volkswagen (VWAGY) – Major importer to the U.S.; down sharply since the tariff news broke.
- BMW (BMWYY) – Down over 8% in just 5 days after the announcement.
- Mercedes-Benz Group (MBGYY) – Down 8.22% in 5 days.
- Honda (HMC) – Down nearly 10% in 5 days.
- Hyundai (HYMTF) and Kia – Also down about 6%, both South Korean brands that import to the U.S.
Auto Parts Suppliers: A Downstream Hit
Parts suppliers are also exposed. Many supply both U.S. and foreign automakers, and tariffs on parts will raise costs across the board.
Stocks to watch:
- Aptiv PLC (APTV) – Down 7.31% in just a few days. Supplies components to a broad array of automakers.
- Magna International (MGA) – Down nearly 10%, one of the world’s largest auto suppliers with global operations.
Car Dealerships and Retailers: Mixed Impacts
Retailers may see fewer new car sales if prices spike. But used car dealers might benefit in the short term, as demand shifts away from pricier new vehicles.
Stocks to watch:
- AutoNation (AN) – Down 7.57% in the past 5 days.
- CarMax (KMX) – Interestingly, up 6% in the same period, possibly due to optimism that consumers will turn to used cars.
Luxury Brands: Wealth Insulates Demand?
Luxury automakers like Porsche and Ferrari may see a smaller impact, as their affluent customer base is less price-sensitive. Still, investor uncertainty is evident.
- Porsche (POAHY) – Down 10.67% in 5 days.
- Ferrari (RACE) – Down only 1.74%, showing relative resilience.
U.S. Automakers: Mixed Bag
While U.S.-based companies like Ford and General Motors could benefit from reduced competition, they still rely on imported parts and have overseas manufacturing.
- Ford (F) – Down 2.53%; impact is unclear but likely less severe.
- General Motors (GM) – Down 8.47%, reflecting potential concern over international supply chains.
EV Companies: Room for Debate
EV makers like Tesla (TSLA) and Rivian (RIVN) are U.S.-based but could still face challenges if they source parts globally.
- Tesla (TSLA) – Down 8.54% in 5 days and over 31% year-to-date due to multiple challenges.
- Rivian (RIVN) – Up 2.13% recently, perhaps benefiting from a perception of being more domestically insulated.
Final Thoughts
These new tariffs have already caused volatility across the auto sector. While foreign automakers and global parts suppliers appear to be the most vulnerable, the long-term effects may ripple throughout the entire automotive ecosystem. Even U.S.-based companies may not be immune due to their global operations.
Investors should watch closely how the market reacts leading up to and following the April 3rd implementation date. While this article is not financial advice, it's clear that tariffs of this scale can significantly alter investor sentiment and company valuations.