Trump Trade: Carmakers slip after 25% tariff threat on Mexico, Canada

Catch up on the top industries and stocks that were impacted, or were predicted to be impacted, by the comments, actions and policies of President-elect Trump with this daily recap compiled by The Fly:

MEXICO, CANADA TARIFFS: U.S. President-elect Donald Trump said in posts on Truth Social, “As everyone is aware, thousands of people are pouring through Mexico and Canada, bringing Crime and Drugs at levels never seen before. Right now a Caravan coming from Mexico, composed of thousands of people, seems to be unstoppable in its quest to come through our currently Open Border. On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States, and its ridiculous Open Borders. This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country! Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem. We hereby demand that they use this power, and until such time that they do, it is time for them to pay a very big price!

“I have had many talks with China about the massive amounts of drugs, in particular Fentanyl, being sent into the United States – But to no avail. Representatives of China told me that they would institute their maximum penalty, that of death, for any drug dealers caught doing this but, unfortunately, they never followed through, and drugs are pouring into our Country, mostly through Mexico, at levels never seen before. Until such time as they stop, we will be charging China an additional 10% Tariff, above any additional Tariffs, on all of their many products coming into the United States of America. Thank you for your attention to this matter.”

Shares of several automakers like Ford (F) and General Motors (GM) were under pressure after Trump’s posts.

WEIGHT LOSS DRUGS: Ahead of Donald Trump’s second term, the Biden-Harris Administration proposed a new rule to expand coverage of anti-obesity medications for Americans with Medicare and Medicaid. An estimated 42% of the U.S. population has obesity, which is now widely recognized as a chronic disease, with increased risk of all-cause mortality and multiple related comorbidities such as diabetes, cardiovascular disease, stroke, some cancers, and more, the Administration said in a statement. “Over the past few years, there have been major scientific advancements in the treatment of obesity, with the introduction of new life-saving drugs. These anti-obesity medications can help prevent the development of Type 2 diabetes. Furthermore, these drugs reduce deaths and sickness from heart attack and other cardiovascular outcomes by up to 20%. But for too many Americans, these critical treatments are too expensive and therefore out of reach. Without insurance coverage, these drugs can cost someone as much as $1,000 a month,” it added. Currently, Medicare and Medicaid cover the use of anti-obesity medications for certain conditions, like diabetes. The new proposal would expand access to these medications for obesity, the White House says. The drugs covered would include Wegovy from Novo Nordisk (NVO) and Zepbound from Eli Lilly (LLY).

POSITIVE FOR COMPOUNDERS: Shares of Hims & Hers (HIMS) moved higher after President-elect Donald Trump nominated Dr. Marty Makary, a pancreatic surgeon at Johns Hopkins University, as commissioner of the Food and Drug Administration. Makary is also Chief Medical Officer at startup Sesame, which prescribes compounded GLP-1 weight loss drugs through the mail. Hims & Hers also sells compounded weight loss drugs.

Commenting on the news, BofA noted that the ability for Hims & Hers and peers like Sesame to sell compounded GLP-1s will be decided by the FDA and having a leader of the agency that currently works for a company that operates as a GLP-1 compounder is “at a minimum” a positive incremental development for the future of the broader compounded GLP-1 opportunity. While the firm maintains its Underperform rating on Hims & Hers given negative competitive developments, it acknowledges “the upside risk around GLP-1s.”

TARIFFS IN THE STARS: Roth MKM notes that Constellation Brands (STZ) is the most exposed to possible tariffs on imports from Mexico. While there is only so much mitigation that Constellation can take, the firm believes that implementation might not happen, rather potential tariffs open negotiations; Constellation could be exempted; or brand elasticities could handle some pass-through. Roth estimates Constellation would need a 12% beer price increase to fully offset a 25% increase in beer cost of goods sold. The firm has a Buy rating on the shares with a price target of $298.

OTHER NEWS: Replying to a Bloomberg report that said California Governor Gavin Newsom announced that if the incoming Trump Administration eliminates a federal ZEV tax credit, he will propose creating a new version of the state’s Clean Vehicle Rebate Program, which would exclude popular Tesla (TSLA) models from eligibility, Tesla CEO Elon Musk stated on X that, “Even though Tesla is the only company who manufactures their EVs in California! This is insane.”