📉 American automotive industry under pressure! 🚗🌎
The news that Donald Trump plans to introduce 25% tariffs on goods imported from Canada and Mexico has sent shockwaves through the markets. Shares of companies like General Motors $GM and Stellantis $STLA plunged by more than 8 %, while smaller players like Ford and Toyota have seen more modest losses.

Much of the production of cars and parts is outsourced to these countries thanks to the favourable terms brought about by the NAFTA agreement, now known as USMCA.

Dependence on Mexico and Canada: 26 % of all imports from Mexico to the USA are cars and parts. Canada adds another 12 %. Tariffs would dramatically increase the cost and possibly the final price of vehicles.

The most at risk segments: High-end pickup trucks, which GM a Stellantis produce in Mexico, could lose their competitive advantage.

🔍 Politics or strategy?
Analysts say it's probably a tactic. Trump's history shows he has used similar threats as leverage in negotiating new trade deals. Similarly, in 2016, when he also threatened huge tariffs to force changes to existing agreements.

📊 Tariffs can have widespread impacts:
Higher vehicle prices in the U.S. market.
Shifting some production back to the U.S., but that could mean lower efficiency and higher costs.
Potential decline in profitability of automakers and their stocks.

However, the current declines in carmaker shares may be an opportunity if you believe that this is only a short-term pressure and that tariffs will not eventually be imposed. On the other hand, if the tariffs do go through, the long-term impacts on global supply chains could be substantial.

Is the threat of tariffs just a political tool or a necessary step to protect US industry? What is your view of the global automotive industry?