U.S. auto stocks surged Monday after President Donald Trump suggested his administration may offer relief to carmakers affected by new and existing import tariffs. The remarks, though vague, were enough to boost investor sentiment and send shares of Ford (F), General Motors (GM), and Stellantis (STLA) each up more than 3% by market close.
“They Need a Little Time,” Trump Says
Speaking about automakers’ efforts to shift supply chains back to North America, Trump said, “I’m looking at something to help some of the car companies, where they’re switching to parts that were made in Canada, Mexico, and other places, and they need a little bit of time.”
However, the president did not specify whether the relief would target the existing 25% tariff on auto imports or the 25% tariff on car parts set to take effect by May 3.
Industry insiders point out that even under the USMCA trade agreement, many vehicles assembled in North America still face tariffs unless they meet strict content requirements. Parts manufactured in the U.S. can be excluded from tariff calculations, but the transition has proven challenging for automakers.
Stock Market Responds Quickly
Investors welcomed the comments. Shares of:
- Ford (F) rose 4.07%
- Stellantis (STLA) gained 5.64%
- General Motors (GM) climbed 3.46%
The rally comes amid broader market optimism following a temporary tech tariff exemption that also lifted the Dow, S&P 500, and Nasdaq earlier in the day.
Supply Chain Reactions and Consumer Cost Concerns
Since Trump’s April 2 “Liberation Day” speech that reignited the trade war with sweeping tariff hikes, automakers have been scrambling to adapt. According to Deutsche Bank’s Edison Yu, some manufacturers like Ford and Stellantis have already introduced short-term price discounts, while others, including GM, are ramping up domestic production capacity. GM is increasing output at its Fort Wayne, Indiana facility, while Stellantis is pausing some operations in Canada and Mexico.
Yet the real concern lies with consumers. Analysts estimate tariffs could raise prices by $3,000 to $12,000 on non-luxury vehicles, creating affordability challenges and potential demand destruction.
Industry Forecasts Signal Sales Declines
According to research firm Telemetry, the U.S. is projected to lose 1.8 million new vehicle sales this year due to tariffs. S&P Global Mobility forecasts total U.S. light-vehicle sales will fall to between 14.5 million and 15 million units in 2025, down from an estimated 16 million in 2024.
These projections align with Kelley Blue Book’s estimate that 15.8 million new cars and light trucks were sold in 2024, underscoring the magnitude of potential losses.
