U.S. auto stocks crept higher Wednesday as President Donald Trump weighs granting a one-month exemption for U.S. automakers on import tariffs from Canada and Mexico. Those duties went into effect Tuesday and sent many automobile manufacturer stocks lower. Meanwhile, Trump, during his address to Congress Tuesday night, announced he wants to make deductible the tax on auto loan interest payments, for vehicles made in the U.S.
Trump reportedly spoke with executives at Ford, Stellantis and General Motors, telling them that he is "going to give a one month exemption on any autos coming through the USMCA," White House press secretary Karoline Leavitt told the press Wednesday. The USMCA refers to the North American free trade agreement.
Commerce Secretary Howard Lutnick signaled this tariff exemption when he said late Tuesday that Trump will "probably" announce tariff compromise deals with Canada and Mexico.
The comments from Lutnick appeared to send several U.S. auto stocks higher early Wednesday, just a day removed from the sector falling lower with Trump's tariffs on Mexico and Canada expected to increase the cost for auto parts.
Meanwhile, Trump also on Tuesday re-pitched an idea previously floated the idea at several campaign stops in late 2024.
"I also want to make interest payments on car loans tax deductible, but only if the car is made in America," Trump said Tuesday. "We're going to have growth in the auto industry nobody has ever seen."
Auto Stocks: Tesla Advance After Tuesday's Dip
Tesla stock advanced 2.6% to 279.10 during Wednesday's stock market action. The U.S.-based EV giant sank 4.4% to 272.04 on Tuesday, hitting a new 2025 low of 261.84.
Meanwhile, Ford gained 5.8% Wednesday after retreating 2.9% to 9.12 on Tuesday. General Motors jumped 7.2% Wednesday, erasing its 4.6% loss on Tuesday.
Stellantis also advanced 9.4% Wednesday. The stock fell 4.4% to 11.80 on Tuesday. STLA stock's move on Wednesday could also be due to the European Commission proposal to ease carbon emissions rules that were set to become stricter in 2025.
Tesla stock has a 21-day average true range of 5.5%. The ATR metric is available on IBD's MarketSurge charting tool. It gauges the characteristic breadth of a stock's behavior. Stocks that tend to make large jumps or dives in daily action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs.
General Motors has a 21-day average true range of 3.27% while Stellantis has a 3.3%. Ford stock has a 21-day average true range of 2.6%.
Trump: The Car Loan Tax Deduction
The president has not yet disclosed details about how the tax deduction plan would be implemented. However, since Trump first outlined the idea late last year, tax experts have said it would likely provide the most benefits to wealthy Americans compared to low-income workers.
If the plan is similar to the mortgage interest deduction, vehicle owners would need to itemize borrowing costs, which, according to some tax experts, would mainly help high-income earners.
Currently, only about one in 10 taxpayers itemize, the majority of whom are high-income earners. For instance, more than 60% of people earning over $500,000 itemize, versus 4% of those earning between $30,000 to $50,000, according to the Tax Policy Center.
The Tax Policy Center said a deduction for interest on car loans could cost as much as $10 billion per year if structured as an above-the-line deduction, meaning it would be available to taxpayers whether they itemize or claim the standard deduction.
Please follow Kit Norton on X @KitNorton for more coverage.
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