Shares of General Motors, Ford, and Stellantis climbed on Wednesday after the Trump administration delayed auto tariffs on Mexico and Canada for one month.
GM shares gained 5%, Ford rose 4%, while Stellantis surged around 7%.
Despite today’s gains of 4% to 7% for the “Big Three,” only General Motors shares remain in positive territory over the past year.
On a year-to-date basis, all three stocks remain in the red.
Trump to extend tariff pause
President Donald Trump is granting automakers a one-month exemption from newly imposed tariffs on Mexico and Canada, the White House announced Wednesday.
“We are going to give a one-month exemption on any autos coming through USMCA,” White House Press Secretary Karoline Leavitt said, referring to the trade deal Trump negotiated during his first term.
Reciprocal tariffs will still take effect on April 2, but at the request of companies associated with USMCA, the president is providing a temporary exemption to prevent economic disadvantages, Leavitt added.
Senior administration officials had met with executives from Ford, GM, and Stellantis on Tuesday.
Commerce Secretary Howard Lutnick had previously hinted that exceptions may be considered, saying adjustments to the tariff policy could be announced as early as Wednesday.
One reason for a temporary reprieve would be to allow automakers time to shift more investment and production to the US, a key demand from Trump.
President Trump has also suggested offering tax breaks to buyers of US-manufactured cars during his address to a joint session of Congress on Tuesday night.
Impact of Trump’s tariffs on the auto industry
Detroit’s Big Three automakers have strongly opposed the tariffs, cautioning that they could have major consequences.
They warned that auto prices could surge by thousands of dollars almost immediately, making vehicles less affordable for consumers.
The tariffs also pose a threat to supply chains, potentially causing severe disruptions that could impact production and delivery timelines.
Tariffs on Canada and Mexico could significantly raise US car prices, with costs climbing by as much as $12,000, according to a study by Anderson Economic Group.
The study estimated that building a crossover utility vehicle would become at least $4,000 more expensive.
For electric vehicles, the impact would be even greater, with costs potentially tripling.
Additionally, analysts have highlighted risks to profitability, suggesting that the tariffs could significantly erode or even wipe out earnings for US automakers.
Barclays analyst Dan Levy estimates that, without adjustments, the now delayed tariffs could erase all profits for the Detroit automakers.
However, Levy sees a buying opportunity in the recent weakness, arguing that tariffs of this scale are unlikely to remain in place long-term.
“Given the potential for significant disruption ahead if the tariffs stick, we believe it’s a reminder as to why tariffs of this magnitude are unlikely to stick,” Levy wrote.
Many analysts believe that higher tariffs will ultimately be used as a negotiating tool rather than a permanent policy shift.
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