Trump Tariffs Cause $4,200 Increase in US New Car Prices... Auto Stocks Plunge

Up to 55% Imports from Canada and Mexico
Some Say "Negotiation Tactic... No Actual Imposition"
GM Down 8.99%... European Car Market Cap Drops 14 Trillion

An analysis has emerged suggesting that new car prices in the United States could rise by an average of 4.2 million won due to President-elect Donald Trump's 'tariff bomb' policy.

On the 26th (local time), Bloomberg News cited a report from Wolfe Research to reveal this.

General Motors factory located in Coahuila, Mexico. Photo by Reuters and Yonhap News.

Wolfe Research stated that auto parts imported from Canada and Mexico to the U.S. amount to about $97 billion, and the volume of finished vehicles is around 4 million units, warning that a 25% tariff would be devastating. They predicted that new car prices would increase by an average of $3,000 (approximately 4.19 million won) due to the tariff effect. The day before, President-elect Trump announced plans to impose 25% tariffs on imports from Canada and Mexico respectively.

Stephanie Valdez Streety, Head of Industry Insights at market research firm Cox Automotive, said, "We have talked about manageable costs throughout this year," adding, "Price increases will further burden consumers who are already struggling to purchase vehicles."

According to Bernstein analysts, Stellantis and Volkswagen import about 40% of the vehicles they sell in the U.S., General Motors (GM) imports about 30%, and Ford imports 25%. In particular, for trucks, GM and Stellantis import 55% from Canada and Mexico. According to UBS, exports from Mexico to the U.S. account for 26% of the entire auto industry, while exports from Canada to the U.S. account for 12%.

President-elect Trump has stated that tariffs will increase manufacturing jobs in the U.S. However, since relocating production bases takes several years, the immediate job effect is expected to be low. It could also result in factories moving to third countries.

However, many in the market believe that President-elect Trump will not actually raise tariffs, viewing tariffs as a tool for negotiation. Wolfe Research analysts said, "Considering the scale of damage additional tariffs would cause to the auto industry, most investors are expected to think that President-elect Trump will not carry out these threats," but added, "However, this cannot be guaranteed."

Dan Levy, an analyst at Barclays, said, "I see this announcement as a negotiation strategy similar to 2016," and forecasted that tariffs of this scale are unlikely.

On the day of President-elect Trump's tariff threat, auto company stocks fell one after another. On the New York Stock Exchange, GM shares closed down 8.99%, Stellantis down 5.68%, and Ford down 2.63%.

In European markets, the pan-European STOXX600 auto and parts index fell 1.7%. The British daily Telegraph estimated that the market capitalization of major European automakers disappeared by about 10 billion euros (14.6433 trillion won) in a single day.