The border wall is visible in the background as a semi-truck loaded with Toyota trucks crosses a bridge after passing U.S. Customs while entering the United States from Mexico at the San Diego border, on March 4, 2025.
Mike Blake | Reuters
Automotive stocks are reacting to President Donald Trump’s declaration of a 25% tariff on “all cars not manufactured in the United States,” along with specific automobile components.
The Trump administration had been signaling intentions to impose tariffs on the auto sector, and the repercussions along with the enforcement mechanisms are now becoming clearer. The President’s executive order specifies that the tariffs will take effect for vehicles on April 3 and for auto parts on May 3.
General Motors shares dropped by approximately 7% in morning trading on Thursday, while Stellantis experienced a decline of over 3%. In contrast, Tesla saw a slight increase, while Ford Motor stocks remained relatively stable.
“In our analysis, Tesla and Ford seem to be the least affected due to the locations of their vehicle assembly plants, although Ford does have some additional risk concerning imported engines,” analysts at Deutsche Bank noted in a report on Thursday. “General Motors is most vulnerable to disruptions originating from Mexico.”
Trump announced Wednesday that no tariffs would be imposed on vehicles manufactured in the U.S.
The tariffs will target imported passenger vehicles and light trucks, as well as crucial automotive components like engines and transmissions, according to a fact sheet from the White House.
Details regarding the tariffs are still being finalized. Auto parts that comply with the United States-Mexico-Canada Agreement will remain exempt from tariffs until the commerce secretary can coordinate with U.S. Customs and Border Protection to determine how tariffs will be applied to non-U.S.-made content.
Canadians participate in an “Elbows Up” protest against U.S. tariffs and the policies of U.S. President Donald Trump, held at Nathan Phillips Square in Toronto, Ontario, Canada, on March 22, 2025.
Carlos Osorio | Reuters
The United Auto Workers union expressed support for Trump’s announcement.
“These tariffs represent a significant advancement for autoworkers and blue-collar communities nationwide, and it is now up to the automakers, including the Big Three and Volkswagen, to restore quality union jobs in the U.S.,” UAW president Shawn Fain stated on Wednesday.
Vehicles consist of tens of thousands of components, many of which traverse the U.S. border multiple times before the final assembly.
According to data from S&P Global Mobility, an average vehicle contains around 20,000 parts when disassembled. These parts can originate from anywhere between 50 to 120 countries.
The firm further reports that an average of 25 automakers produce approximately 63,900 light-duty passenger vehicles in North America daily, with about 65% assembled in the U.S., 27% in Mexico, and 8% in Canada.
Goldman Sachs analysts mentioned on Thursday that Trump’s 25% tariff could increase the cost of imported vehicles by $5,000 to $15,000. If around 50% of parts in a U.S.-manufactured vehicle are sourced internationally, the tariff might raise the price of those vehicles by $3,000 to $8,000, they noted.
Previously, President Trump granted a one-month exemption from tariffs for vehicles that meet the United States-Mexico-Canada Agreement’s trade rules regarding origin.
— Contributions to this report came from CNBC’s Michael Wayland and Michael Bloom.
