By Dean Seal

The global auto industry is facing major, multifaceted headwinds after President Trump unleashed a wave of wide-ranging tariffs that aren't expected to leave any automaker unscathed, according to analysts.

"The tariffs are a debacle of epic proportions for the auto industry and U.S. consumers, as the concept of a U.S.-made car with all U.S. parts is a fairy tale fictional narrative," Dan Ives and other Wedbush analysts said in a research note.

Trump on Wednesday followed through on a plan to launch 25% import tariffs on vehicles and auto parts, and also instated reciprocal tariffs and higher rates for certain countries, all of which roiled global markets and led to the latest selloff in automotive stocks.

The levies, which Trump claims will benefit U.S. manufacturing, are a black swan event for the auto industry that will send vehicle prices surging by $5,000 to $10,000 apiece and wreak havoc on auto demand, Wedbush analysts said.

After Trump announced the tariff slate, Jeep and Dodge maker Stellantis informed its local union that it would idle its minivan plant in Windsor, Ontario, for two weeks and another Jeep facility in Toluca, Mexico, for the rest of April. The decision was primarily driven by Trump's auto tariffs and is expected to affect about 900 U.S. employees at U.S. part-making facilities, according to a company email.

Stellantis's stock was down 8.6%, at $10.31, in the afternoon trading session. The other two Big Three automakers, Ford Motor and General Motors, saw their shares drop 4.6%, to $9.69, and 3.7%, to $46.21, respectively.

On top of the 25% auto tariffs, Trump has implemented reciprocal tariffs against countries in Asia that make electronic components for vehicles, as well as countries, such as Indonesia, that provide nickel critical for electric-vehicle batteries, UBS analysts said in a research note.

While higher costs from auto tariffs are expected to directly raise vehicle prices, reciprocal tariffs could indirectly raise those costs and prices, the UBS analysts said. The spate of new duties could also boost costs for U.S. consumers more generally, which would further weigh on auto demand, the analysts said.

"There are nearly unlimited permutations of the knock-on effects," the analysts said.

The levies are expected to not only jack up car prices, but also take a major toll on automakers' earnings power.

JPMorgan analysts said the 25% tariff drove an average 25% reduction in their earnings estimates for Stellantis and German automakers. That doesn't account for the investments that would be required for the companies to move production or supplier content to the U.S. from Mexico, they said in a research note.

American depositary receipts of Volkswagen and Mercedes-Benz Group were down about 2% in afternoon trading.

Even companies like Tesla and Rivian Automotive, which manufacture in the U.S., are unlikely to be spared from the pain given that they both use components produced overseas and will likely still face dented auto demand from U.S. consumers, analysts said.

Shares of Tesla were down 5%, at $268.75, while shares of Rivian were down 7.2%, at $11.59, in the afternoon session.

Write to Dean Seal at dean.seal@wsj.com

(END) Dow Jones Newswires

April 03, 2025 14:30 ET (18:30 GMT)

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