What Potential New U.S. Auto Tariffs Mean for Industry
Toyota and GM's Buick brand have concerning exposure, but it's too early to say that we'll change their fair value estimates as a result.
On May 23, The Wall Street Journal reported the U.S. Commerce Department is considering starting an investigation, which could last over 10 months, that might lead to tariffs of up to 25% on imported vehicles in the United States. We don't see these tariffs lasting forever and we think these tariffs will ultimately cost American jobs. Just as the White House did with steel and aluminum tariffs announced in March, it would invoke Section 232 of the Trade Expansion Act of 1962 citing national security. We disagree but measures like this are ultimately about protecting American manufacturing jobs in states that voted for Trump rather than national security. We don't have detail yet as to if auto parts are also impacted and what countries are impacted, but we assume it would be for countries outside of North America due to NAFTA exempting Canadian and Mexican auto imports into the U.S.
If that assumption holds, we see
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