As threats of U.S. tariffs loom over global car manufacturers, Ferrari (RACE) stands out as a unique case in Europe’s auto sector. On Monday, President-elect Donald Trump vowed to impose steep tariffs on imports from China, Canada, and Mexico, a move that could disrupt supply chains and increase costs for automakers. Trump’s proposed tariffs include a 10% levy on Chinese products and a 25% tariff on products from Canada and Mexico entering the U.S.
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The news rattled automobile manufacturers, particularly those in the U.S. and Europe, which rely on suppliers based in Mexico for auto parts and have built factories there. While Europe was notably absent from Trump’s initial targets for tariffs, concerns persist that it could soon face similar scrutiny.
Ferrari May Remain Insulated from Tariffs
However, Ferrari, the luxury automaker, appears insulated from much of the fallout. According to a CNBC report, Morningstar analyst Rella Suskin commented, “For Ferrari, it is the one exception where whatever the tariff is, they are not going to start producing in the U.S.” Suskin highlighted that Ferrari’s exclusive market and high-end clientele enable the company to absorb tariffs of 10%, 20%, or even 30% by adjusting prices without significantly affecting demand.
In contrast, Porsche, owned by German automaker Volkswagen (OTC:VWAPY), may face greater challenges. While the luxury car brand traditionally manufactures its vehicles in Germany, it could struggle to pass higher tariffs onto customers. As Suskin noted, although Volkswagen has manufacturing capacity in the U.S., creating a Porsche-specific production line would require substantial investment.
Is RACE Stock a Buy?
Analysts remain cautiously optimistic about RACE stock, with a Moderate Buy consensus rating based on nine Buys, five Holds, and one Sell. Year-to-date, RACE has surged by more than 25%, and the average RACE price target of $471.59 implies an upside potential of 9.3% from current levels.
