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Trade policy uncertainty is once again swirling on Wall Street after President Donald Trump confirmed that he will impose a 25% tariff on car imports. The tariffs will go into effect on April 3 and cover imported finished cars and car parts, including from major trading partners Mexico and Canada. Car parts may have slightly longer before tariffs are levied, with the White House setting the date as no later than May 3.
After the announcement of these tariffs, auto stocks are trading sharply lower today. The price action is not surprising as foreign automakers import finished cars worth billions of dollars every year into the U.S. and these vehicles would now be subject to a 25% tariff which Trump emphasized is “permanent.” U.S.-based automakers like Ford (F) and General Motors (GM) also build some of their cars in Canada and Mexico. The North American automotive industry is among the most integrated globally, and some parts can cross borders multiple times before a vehicle is finished and assembled.
