- A 25% tariff being considered on vehicles and auto parts imported into the U.S. would be mostly credit negative for the global auto industry, including automakers, parts suppliers, car dealers, and transportation companies, Moody's Investors Service says in a report.
- GM (GM -1.5%), especially, would be hurt by such a tariff, Moody's says. GM depends on imports from Mexico and Canada to support its U.S. operations--30% of U.S. unit sales vs. 20% for Ford (F -1.2%). It also gets a significant portion of its high-margin trucks and SUVs from Mexico and Canada.
- "Both GM and Ford would need to absorb the cost of scaling back Mexican and Canadian production and shifting some back to the U.S.," says Moody's senior vice president Bruce Clark. "They would also likely need to subsidize sales to offset the tariffs during the near term, and could eventually pass on the higher costs to consumers."
- Non-U.S. automakers will be hit harder than U.S. companies, with Jaguar Land Rover and Volvo hit particularly hard because they don't have any U.S. factories.Jaguar Land Rover is owned by India's Tata Motors (TTM -6.3%), and Volvo is owned by China's Geely Automobile Holdings (OTCPK:GELYF -3.2%).
- Other related tickers:(FCAU -0.7%),(TM -1.8%), (OTCPK:NSANY -1.3%), (HMC -1.6%),(OTCPK:VLKAY -2%),(OTC:RNSDF -3.4%).
- ETFs: CARZ, FTXR
- Now read: Despite Tesla (NASDAQ:TSLA)'s Model 3, Audi, BMW And Mercedes Grew 3% This Year
Original article