GM Stock Plunges On Possible Tariffs

By Douglas A. McIntyre Published Nov 30, 10:35AM EST

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GM Stock Plunges On Possible Tariffs — © 2020 GMC Acadia AT4 front NYIAS 2019 (BY-SA 4.0) by Kevauto

After the Trump Administration announced its decision to impose massive tariffs on goods from Mexico, Canada, and China, auto stocks took a beating. Mexico and Canada build cars and car parts for several manufacturers, led by General Motors (NYSE: GM | GM Price Prediction) and Ford (NYSE: F). The Wall Street Journal estimates that 16% of vehicles sold in the US in 2024 are from Mexico and 7% in Canada.

GM’s stock was hit particularly hard. After the tariff news broke on Tuesday, shares dropped 8%, ending the week down 6.4%.

It is still too early to tell how much GM and Ford will need to increase prices to offset the financial cost of these tariffs. Additionally, their overall US new car inventories might drop because it is not financially viable to import certain models at all.

Some companies may face even higher tariffs than GM and Ford. VW and Nissan import more cars and car parts from Canada and Mexico than GM or Ford do. To keep their margins intact, they may need to increase their retail prices even more than the two US companies. However, these profit savings increases could also put VW and Nissan out of the market.

One byproduct of the tariffs may be that GM and Ford will make more parts and cars inside US borders. That, in theory, would improve US employment overall, which could, in turn, help the American economy. A long list of things need to go right to offset more expensive cars.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.