President Donald Trump’s 25% tariffs on Mexico and Canada are expected to significantly impact the North American automotive industry, which includes General Motors (GM), Ford (F), and Stellantis (STLA). In fact, roughly a third of vehicle production in the region could be cut by next week, equating to a loss of around 20,000 units per day, according to S&P Global Mobility. This reduction would be the result of automakers trying to mitigate the increased costs of production, as well as buyers holding off on purchasing new cars and trucks.
The tariffs could lead to layoffs and continued production impacts if they are not changed or lifted. Interestingly, GM CEO Mary Barra stated that the company could mitigate the short-term impacts of between 30% and 50% of the additional costs “without deploying any capital.” Separately, Ford CEO Jim Farley said that the tariffs would insert “unneeded chaos” into the industry.
The production impact will vary by automaker, vehicle, and plant location, with some plants potentially being idled or producing fewer vehicles that rely on parts that cross the border multiple times. For example, the Ford F-150, which is assembled exclusively in the U.S., has roughly 2,700 main billable parts that are sourced from 24 different countries. As a result, the Alliance for Automotive Innovation has warned that some vehicle prices could rise by as much as 25%.
Which Auto Stock Is the Better Buy?
Turning to Wall Street, out of the three stocks mentioned above, analysts think that GM stock has the most room to run. In fact, GM’s price target of $59.69 per share implies almost 30% upside potential. On the other hand, analysts expect the least from Ford, as its $10.56 per share price target implies 14.7% upside.
