The shares of Magna International (MGA -7.51%) plunged 11.6% this morning as panic gripped investors after President Donald Trump announced plans to impose hefty import tariffs over the weekend, including a 25% levy on imports from Canada and Mexico, with a 10% tariff on imports from China.
These markets are also some of Magna's most important markets, which may explain why the auto parts company's stock slumped today.
And a competitor just painted a scary picture, predicting that Trump's tariffs could hit production in the North American auto industry and trigger massive layoffs. Ouch.
Magna International is headquartered in Ontario and is among the largest publicly traded auto parts companies in Canada. Its financial reports show that Mexico, Canada, and China are among Magna's top five largest end markets outside the U.S. In 2023, the three markets combined accounted for nearly 34% of Magna's total sales.
In an interview with The Globe and Mail, Linda Hasenfratz, the CEO of Canada-based Linamar, said Trump's tariffs will be borne by customers and will therefore make vehicles so costly that it could hit demand hard. That could grind North American vehicle production to a halt and trigger millions of layoffs in the industry, she said. Linamar is among Canada's top automotive parts supplier with extensive operations in North America.
Magna International stock has been in a free fall over the past year or so, with its shares now down 35% in one year, as of this writing. A global slowdown in the auto and electric vehicle (EV) industry was already hurting the company, so Trump's moves couldn't come at a worse time.
However, he has yet to impose the tariffs, and it's too early to predict how deeply they could affect Magna International. Investors should look out for management's views and outlook when its fourth-quarter earnings are released Feb. 14.
Magna reported flat sales for the nine months that ended Sept. 30, 2024, despite a challenging business environment, but it also downgraded its full-year sales guidance slightly to $42.2 billion to $43.2 billion. The company generated $42.8 billion in sales in 2023.
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