Shares of the “Detroit Three” slumped as investors continued digesting President Donald Trump’s tariffs on foreign automobiles and car parts.
Ford Motor Co.’s stock price fell by 2.5 percent during the March 28 trading session and is poised for a weekly loss of about 4 percent. General Motors shares tumbled by more than 1 percent and are on track for a weekly drop of nearly 9 percent.
Stellantis—the maker of Chrysler, Dodge, Jeep, and Ram vehicles—erased 4 percent. The stock will post a weekly slide of nearly 5 percent.
Tesla Motors, which has been mostly unscathed by the president’s tariffs, slid by 3.5 percent but will register a weekly gain of about 2 percent.
This week, Trump announced he is implementing 25 percent tariffs on “all cars that are not made in the United States.” These levies, scheduled to take effect on April 3 and become permanent, will affect imported passenger vehicles and light trucks. In addition, the president will slap import duties on vehicle parts, such as engines and transmissions, entering the country beginning May 3.
Automobiles manufactured in the United States will not face tariffs.
“This will continue to spur growth like you haven’t seen,” Trump told reporters at the Oval Office on March 26. “I think our automobile business will flourish like it’s never flourished before.”
Trump received support from the United Auto Workers (UAW) union.
“These tariffs are a major step in the right direction for autoworkers and blue-collar communities across the country, and it is now on the automakers, from the Big Three to Volkswagen and beyond, to bring back good union jobs to the U.S.,” Shawn Fain, UAW president, said in a statement.
Administration officials say the tariffs are a measure to shield the domestic automobile industry from unfair foreign competition and bolster U.S. manufacturing.
Peter Navarro, Trump’s senior trade and manufacturing adviser, says auto tariffs will facilitate a “golden age gold rush” for U.S. car companies.
In a recent CNBC interview, Navarro stated that the United States has no auto industry capable of manufacturing but that the sector can assemble.
“I think it’s going to be very interesting to watch the strategies of all the different auto companies because it’s going to be like a golden age gold rush for these companies,” he said. “Because the sooner all of them get to a point where they have more American-made content, there’s no tariffs, and there’s more sales and more profits, and life will be good.”
New and Used Car Prices
Bureau of Economic Analysis data show that the United States imported more than $475 billion worth of vehicles, parts, and engines last year. Nearly half came from Mexico ($182 billion) and Canada ($57 billion).
This is why the Big Three auto stocks have observed a divergence in the stock market.
GM shares have been hit the hardest because a substantial portion of its business depends on sourcing from Canada, Mexico, South Korea, and other countries. Ford and Stellantis, meanwhile, assemble a greater share of their U.S.-sold units domestically.
Several analyses suggest that the president’s auto tariff plans will trigger inflationary effects.
Cox Automotive estimates that 25 percent tariffs will increase prices on average by $5,300. This will exacerbate affordability challenges gripping the industry, says Erin Keating, an executive analyst at Cox Automotive.
“Affordable new vehicles are already few and far between—there are only 27 vehicles available with prices starting below $30,000, four of which have already been discontinued,” Keating said in a note.
A Tesla showroom in New York City, on March 20, 2025. Samira Bouaou/The Epoch Times
Mark Malek, chief investment officer at Siebert Financial, says tariffs on imported cars and auto parts will affect the economy and will be immediately observed in the inflation data.
“Most discussions around inflation and tariffs have been around how companies might pass along tariffs to consumers,” Malek said in a note emailed to The Epoch Times. “While this scenario will certainly occur in imported autos or ones that contain foreign-made components, those price increases will occur over time and only once inventory is cleared off of lots.”
According to economists at Capital Economics, the direct impact on U.S. inflation could be modest.
At the same time, motor vehicle tariffs could have knock-on inflation effects by increasing costs for insurance, repair services, used cars, and domestically produced automobiles.
“Motor vehicles and parts account for 4 percent of personal consumption expenditures, meaning that a 10 percent rise in the prices of all vehicles and parts—which is a reasonable ballpark impact—would boost total PCE [personal consumption expenditures] price inflation by a larger 0.4 percent-points,” economists at Capital Economics said in a note.
Tesla May Escape Tariff Turbulence
Tesla might avoid a bulk of Trump’s tariff endeavors because of its localized manufacturing.
Cars.com released its annual American-Made Index report in January, showing that the Tesla Model Y was the most American-made vehicle. The Tesla Model X ranked No. 9 in 2024.
A separate 2024 Made in America Auto Index, produced by American University’s Kogod School of Business, found that Tesla was ranked in the top four spots, with the Cybertruck taking the third slot. The report highlighted that Tesla vehicles contain at least 80 percent domestic content.
TD Cowen analyst Itay Michaeli views Tesla as being built to endure tariffs.
“Tesla is a relative beneficiary given 100 percent U.S. production footprint, substantial U.S. sourcing and with Model Y competing in a midsize crossover segment where close to ~50 percent of vehicles could be subject to tariffs,” Michaeli said in a note.
However, Tesla CEO Elon Musk has pushed back against suggestions that Tesla will avert the impacts of U.S. auto tariffs.
“Important to note that Tesla is NOT unscathed here. The tariff impact on Tesla is still significant,” Musk said in a March 26 post on social media platform X.
Malek agrees, writing that while some companies might be more harmed than others, “all will pay more for parts,” which will raise prices.
“So, even Tesla, which manufactures most of its vehicles in the U.S., will pay more for parts because of competition amongst all manufacturers competing for the existing supply of non-tariffed parts, materials, and components,” Malek said.
Reuters contributed to this report.
Andrew Moran
Author
Andrew Moran has been writing about business, economics, and finance for more than a decade. He is the author of "The War on Cash."
