A day after auto stocks broadly declined, the sector lost more ground Friday. The threat that President Donald Trump's 25% tariffs on all foreign-made vehicles could "send the auto industry into pure chaos," and boost the average price of cars between $5,000 and $15,500, according to an analyst.
Wedbush Securities analyst Dan Ives on Friday said, after talking to auto industry players from around the world over the prior 24 hours, that the tariffs will add around $100 billion of annual costs to the auto sector. Those costs will get passed directly onto the consumer and that would "clearly erode demand," Ives wrote.
"Every automaker in the world will have to raise prices in some form selling into the U.S. and the supply chain logistics of this tariff announcement heard around the world is hard to even put our arms around at this moment," Ives wrote.
Trump has reportedly already warned U.S. automakers against raising prices in response to tariffs, according to the Wall Street Journal.
Ives added that U.S. automobiles typically have around 40%-50% of their components come from abroad. A "U.S. car with all U.S. parts made in the U.S. is a fictional tale not even possible today."
"The winner in our view from this tariff is no one … as even Tesla still is hit from these tariffs and will be forced to raise prices," Ives said.
The White House announced the 25% tariffs on "all cars not made in the United States" late Wednesday, saying the tariffs, effective April 2, will be added to any duties already in place. The new Trump tariffs cover autos and some parts and components, including engines, transmissions and power trains. Autos assembled in Canada and Mexico will only face tariffs on non-U.S. parts.
Impact On Tesla
Tesla is widely considered by analysts to be the least affected by Trump's auto tariffs, due to its existing U.S. manufacturing and supply chains.
"It could be a net neutral or they may be good. He has a big plant in Texas, he has a big plant in California and anybody who has plants in the United States, it's going to be good for, in my opinion," Trump said Wednesday.
However, Chief Executive Elon Musk posted to X on Wednesday that Tesla would be significantly impacted by Trump's 25% tariffs on all foreign-made autos.
"Important to note that Tesla is not unscathed here. The tariff impact on Tesla is still significant," Musk wrote on X.
The Tesla brand is also becoming increasingly political as countries look to retaliate against the U.S. and Trump.
Canada late on Tuesday froze $43 million in what it termed "suspicious" EV rebates for Tesla. It also excluded the U.S. EV giant from the country's future EV rebates, explicitly as retaliation for Trump tariffs.
The United Kingdom appears to be considering something similar. U.K. Finance Minister Rachel Reeves talking to British broadcasters on Thursday said "we are looking at the zero emission vehicle mandate which is why some of ... that money goes to Tesla, and looking at how we can better support the car manufacturing industry in the U.K."
Tesla recently warned that it could be singled out by other countries in a Trump trade war.
"Past U.S. special tariff actions have thus increased costs to Tesla for vehicles manufactured in the United States, and increased costs for those same vehicles when exported from the United States, resulting in less competitive international marketplace for U.S. manufacturers," the company wrote.
Tariffs Weigh On Auto Stocks
Auto stocks General Motors and Ford both fell more than 1% during Friday's stock market open. GM and Ford fell 7.4% and 3.8%, respectively on Thursday.
Chrysler-parent Stellantis dropped 4% Friday after booking a decline on Thursday.
U.S. EV manufacturers Tesla and Rivian both looked fell more than 3% on Friday, but ended the week up.
Meanwhile, German auto titan Volkswagen American Depositary Receipts (ADR) traded down 2.7% on Friday. Ferrari edged up 0.7% Friday after advancing 3.2% on Thursday.
Japan-based Toyota ADR dropped 2.7% and Honda Motor ADR fell 5.3% Friday.
For China-based autos, Li Auto and BYD declined 2.4%. Nio sank 5.7% and XPeng dropped 2.4% Friday.
Please follow Kit Norton on X @KitNorton for more coverage.
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