The automotive industry is bearing the brunt of trade-war crossfire again as U. S. President Donald Trump threatens to slap tariffs of as much…
The automotive industry is bearing the brunt of trade-war crossfire again as U. S. President Donald Trump threatens to slap tariffs of as much as 25% on goods from Mexico, a key production hub for carmakers from Mazda Motor Corp. to General Motors Co.
Mexico is the largest source of U. S. vehicle and auto-parts imports, meaning tariffs would increase costs for virtually every major manufacturer. In late night tweets Thursday, Trump warned tariffs would start at 5% on June 10 and increase to 25% on Oct. 1 unless Mexico stops immigrants from entering the U. S. illegally.
The world’s largest automakers – including Ford Motor Co., Toyota Motor Corp. and Volkswagen AG – lost $17 billion in market value in Friday trading. The Bloomberg World Auto Manufacturers Index slumped as much as 2.2% and ended the week at the lowest since July 2016.
“Tariffs will mean higher price tags on cars for sales in U. S. and that will hit sales,” said Seiichi Miura, an analyst at Mitsubishi UFJ Morgan Stanley. “While the impact will differ for each carmaker, all of them have moved into Mexico.”
GM, Ford and Fiat Chrysler Automobiles NV shares all plunged at least 4% intraday in New York trading. Critical models imported from Mexico include GM’s Chevrolet Silverado and GMC Sierra and Fiat Chrysler’s Ram full-size pickups – the industry’s most profitable vehicles; Toyota’s Tacoma mid-size trucks; and sedans including Nissan Motor Co.’s Versa and Sentra, Volkswagen’s Jetta and the Mazda3.
A 25% tariff would be worth $86.6 billion annually, which “could cripple the industry and cause major uncertainty,” Emmanuel Rosner, an auto analyst for Deutsche Bank, wrote in a report Friday.
