Both Firms Report Earnings in April
We see the US announcing 25% tariffs starting April 3 on foreign vehicles and foreign auto parts on national security grounds as the worst-case scenario for GM GM, Ford F, and the entire US auto industry. Given the high uncertainty about the duration of these tariffs, we are only modeling them in our GM and Ford models for nine months of 2025. The tariff impact is spread across over 4 billion Ford shares, so it does not yield a fair value estimate reduction. However, we are reducing our fair value estimate on GM stock to $73 per share from $81.
Both firms report earnings in late April, so we may make modeling adjustments if the companies issue revised 2025 guidance substantially different from our model. We reduced our 2025 earnings per share for GM by 53% and 63% for Ford. The only bright spot for the industry is the tariffs are not levied on US-manufactured parts content in vehicles, even if that vehicle is assembled outside the US. Parts tariffs will be delayed by at least a month while tracing mechanisms to exclude US-made content are derived. No exemptions will be made for United States-Mexico-Canada Agreement-compliant vehicles or parts made in Canada and Mexico.
We estimate that GM did the final assembly of about 54% of its 2024 US-sold vehicles in the US, while Ford did about 80%. GM also had about 25% from Mexico, 5% from Canada, and 15% from South Korea (Korea is two Buick and two Chevrolet models). Ford’s non-US mix was nearly 15% from Mexico, and it currently has no Canadian assembly. We see Ford as better positioned than GM, though we think everyone loses from these tariffs.
Both firms use high amounts of non-US content in US-assembled vehicles. For example, all of Ford’s F-Series and Ranger pickups are made in the US, but US government data shows combined US-Canadian F-Series content at 45% and just 8% for the Ranger. Among Ford’s lineup, only the Mustang has over 50% US-Canadian content at 60%, so we still see a sizable tariff impact for Ford.
Will Trump Change His Mind on Tariffs?
Trump said in his March 26 press conference that they would last permanently. Still, we think he would change his mind should so many tariffs induce the US into a recession, especially if the tariffs and the economy lead to the Democrats retaking the House and Senate in the November 2026 midterm election. However, we are not going to speculate on political outcomes. Making vehicles in the US that are not presently made there would take at least three years and several billion dollars per plant for, say, GM to relocate its Silverado and Sierra full-size pickup truck production from Mexico and Canada to join existing US capacity for these two vehicles. Suppliers would also need to spend money to have plants close to these new facilities and to avoid tariffs.
The most significant uncertainty we have for now is how many tariffs will apply to the US auto industry. GM told us recently that they expect the firm will only be hit with one 25% tariff, but stressed they were not sure. Executive orders and proclamations from The White House website indicate tariffs are additional to existing tariffs. The cumulative issue is significant because there are potentially four tariffs affecting autos imported into the US now that USMCA and free trade agreements with nations such as South Korea are effectively terminated.
For example, pickup trucks such as the Chevrolet Silverado, GMC Sierra, and Ford Ranger (and some other light truck models) that are made outside the US would be subject to the 25% so-called “chicken tax” enacted by President Lyndon Johnson in 1964 in response to European tariffs on US poultry. The US has also long had a 2.5% tariff on non-USMCA autos.
Tariffs on Mexico and Canada
There is also the 25% tariff on Canada and Mexico due to start April 2 (already in place for non-USMCA-compliant vehicles) in response to fentanyl and illegal immigration to the US. These tariffs mean a vehicle such as a pickup truck made in Canada or Mexico could have a tariff as high as 77.5%: 2.5% plus 25% chicken tax plus 25% fentanyl/immigration tariff starting April 2 plus 25% April 3 auto tariff.
If tariffs of that magnitude remain in the long term, we think GM would have to begin making all its full-size trucks in the US, while Ford would have to move Maverick compact pickup production from Mexico to the US. There are also 25% steel and 10% aluminum tariffs already in place as of March, so the US auto industry is now in a world of hurt from trade policies that don’t give the auto supply chain time to unwind capacity built around a North American free-trade zone for the past several decades.
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