#TrumpTariffs Auto stocks, including Ford (NYSE:F) and General Motors (NYSE:GM), recovered slightly on Monday after last week’s selloff triggered by former President Donald Trump’s proposed 25% tariffs on imported vehicles and parts. However, Stellantis (BIT:STLAM) continued to struggle as the industry braces for potential disruptions to decades of cross-border integration.
RBC (TSX:RY) analysts warned that the tariffs, set to take effect April 3, could have "wide-ranging ramifications" for North America’s auto sector, which has thrived on tightly linked supply chains since the U.S.-Canada Auto Pact of the 1960s and Mexico’s later inclusion in tariff-free trade. These policies have long reduced costs for consumers and strengthened the region’s global competitiveness.
While the tariffs risk unraveling this efficiency, RBC noted a potential short-term upside amid the expected challenges. The question now is whether the move will revive U.S. manufacturing or trigger higher prices and retaliatory measures—putting the auto industry’s future at a crossroads.
Trump's proposed 25% auto tariffs could hit consumers hard, with RBC estimating 3,000to3,000to6,000 in added costs per vehicle—depending on foreign-made parts. These expenses will likely push up sticker prices for new cars, with inflationary effects lingering in CPI reports for at least a year.
As affordability worsens, buyers may pivot to the used car market, driving up demand—and prices—for pre-owned vehicles. This substitution effect could squeeze budgets even further, creating a domino effect across the auto industry.