President Trump is applying the brakes to the profit engines of global automakers.
Trump said Wednesday the US will impose 25% tariffs on imports of cars and car parts, to take effect on April 3. The measures will apply to both finished cars and trucks.
“This will continue to spur growth that you’ve never seen before,” Trump said from the White House about the new tariffs.
Investors and Wall Street don’t appear to agree, given the response early on Thursday in stock markets and analyst takes.
The tariffs could raise the cost of production for automakers and stunt demand through higher prices for consumers. About half of all vehicles sold in the US are imported.
Read more: What Trump’s tariffs mean for the economy and your wallet
President Donald Trump waves after speaking at a reception celebrating Women’s History Month in the East Room of the White House, Wednesday, March 26, 2025, in Washington. (AP Photo/Mark Schiefelbein) ·ASSOCIATED PRESS
Shares of the Big Three US automakers, which build vehicles abroad, dropped in premarket trading on Thursday. General Motors (GM) and Ford (F) were down 7% and 3%, respectively, while Europe-focused Stellantis (STLA) fell 2%.
“In reality, these [US] carmakers would likely price vehicles much higher, which would result in lower volumes and a lower negative impact to earnings,” RBC Capital Markets analyst Tom Narayan said.
Interestingly, Tesla (TSLA) shares rose 1%. The EV maker, headed by Trump’s DOGE leader Elon Musk, makes the bulk of its models in the US.
Meanwhile, Japanese automakers Toyota (TM) and Honda (HMC) US-listed stock slid 2% each. Europe’s Ferrari (RACE) declined 1%.
Shares in auto-parts suppliers also slipped, with Magna International (MGA) and Dana (DAN) each down by 2%.
Longtime auto journalist Jamie Butters said on Yahoo Finance’s Market Domination (video above) that Ford executive chairman Bill Ford and GM CEO Mary Barra will be meeting with Trump within the week to discuss the new tariffs.
Here is some of the early analysis from Wall Street of Trump’s new auto tariffs.
“We calculated that the maximum negative impact of a 25% tariff on Japanese automakers in aggregate to be ¥4.46 trillion. Among particular automakers, we also estimated that, in light of their high ratios of imports from Canada, Mexico, and Japan, as well as the size of their overall earnings on autos, Nissan Motor would be the most heavily affected company, followed in order by Mazda Motor, Subaru, Mitsubishi Motors, Honda Motor, and Toyota Motor.
“There could be a near-term correction in sector share prices in the wake of the 25% tariff announcement, but we can also envision the market pricing in a scenario of the tariff being negotiated lower. Realistically, the imposition of a 25% tariff would inevitably put upward pressure on auto prices, so in our view, a tariff this high probably cannot be maintained.
“We also think it is quite possible that the tariff will be reduced as a result of other factors, so we believe investors need to judge the situation in a calm manner. Among large automakers, we continue to recommend Toyota because of its ability to withstand tariffs and its strong core fundamentals. Among mid-tier automakers, our bullish stances on Suzuki Motor and Isuzu Motors are unchanged.”
“German OEMs are likely worst hit but we do wonder if the threat of retaliatory tariffs from Europe might discourage tariffs on Europe from being implemented given jobs at SUV plants in the US. Most negatively impacted by tariffs would be Mercedes, BMW, and GM. Ford and Stellantis would also be impacted.
Tesla could benefit meanwhile, given domestic production and competition from imports into the US. We also think Ferrari should be able to price through the tariff quite easily to their high end customer base and share the burden with dealers.”
“In our view these initial tariffs (if they hold in their current form) would be a hurricane-like headwind to foreign (and many US) automakers and ultimately push the average price of cars up $5k to $10k depending on the make/model/price point. We continue to believe this is some form of negotiation and these tariffs could change by the week although this initial 25% tariff on autos from outside the US is almost an untenable head scratching number for the US consumer.
“We expect to learn more over the next week but for now investors will be frustrated by this announcement with few details…as this tariff announcement/25% number is hard to digest.”
“We are lowering our price targets for shares of General Motors, Ford, and Ferrari given the increased potential for material earnings risk from draconian auto tariffs that now seem likelier than ever to be imposed as soon as April 3.
“We are lowering our December 2025 price target for General Motors (GM) by -17% to $53 from $64, for Ford (F) by -15% to $11 from $13, and for Ferrari by -12% to $460 from $525, effected by decreases in our chosen target multiples to reflect less confidence in earnings estimates that are for now unchanged, given the highly volatile regulatory backdrop with regard primarily to tariffs but also (in the case of GM and Ford) EV subsidies and potential consumer tax deductibility of vehicle interest expense for US-built vehicles.”
Brian Sozzi is Yahoo Finance’s Executive Editor. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
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