
The shares of many of the world’s largest automakers fell today after tariff negotiations executed by President Donald Trump fueled concerns about the stability of the auto market in 2025.
Shares of Honda Motor Co. posted the largest decline, falling 5.08% to $26.90 at market close, followed by shares of Stellantis N.V., which declined 3.88% to $12.62. Shares of General Motors dipped 3.15% to $47.90 at market close, while shares of Ford Motor Co. fell 1.74% to $9.89. All four automakers trade on the New York Stock Exchange.
Auto stocks started their descent at market open today after Trump signed an executive order on Feb. 1 stating plans to impose 25% tariffs on goods from Canada and Mexico, beginning at 12:01 a.m. on Feb. 4.
Since the start of the morning and the decline in auto stocks, Trump agreed to delay tariffs on goods from Mexico and Canada for at least one month after negotiating with Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau, according to posts shared to social media by the three leaders today.
Identifying the risks
Both moves by Trump highlight the unclear road ahead for the auto market this year, Frank McCleary, automotive and manufacturing partner with international management consulting firm Arthur D. Little, told Auto Finance News.
“It’s an administration that doesn’t draw a line in the sand and stick to it,” he said.
Michael Brisson, director of economic research at Moody’s Analytics, shared a similar outlook with AFN today, adding that the current trade situation “remains fluid” and poses a major risk to the stabilizing auto market.
“The interconnectedness of North American auto parts and production ensures that the introduction of any tariffs into the system will cause major disruptions to the well-established auto supply chain between the three countries.” — Michael Brisson, Moody’s Analytics
Immediate risks, he added, include:
- Disrupted supply chains;
- Lower profits for OEMs and parts suppliers;
- Lower levels of new-vehicle sales; and
“A slowdown in growth and/or the deterioration of the labor market will lead to additional missed payments by borrowers, higher levels of delinquencies and charge-offs,” Brisson said. “If this were to happen, it would come at a precarious time as total auto delinquencies remained at post-financial crisis highs coming into 2025.”
Automakers should prepare for “multiple outcomes” given that there is “no clear direction,” AD Little’s McCleary said.
“If tariffs are going to increase, [automakers] will have to further localize,” McCleary said. “If it’s just a ploy to renegotiate the [United States-Mexico-Canada trade agreement], it may impact supply chains to a certain extent, but not to the same level. The automotive industry is going to have to think through all these various scenarios.”
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