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Make No Mistake, 25% Tariffs Would Destroy Ford (F), General Motors (GM), and other US Automakers

Austin Smith

Published: February 28, 2025 9:51 am

24/7 Wall St. Key Points:

• Proposed 25% tariffs on Canadian and Mexican auto imports could severely impact Ford (NYSE: F) and General Motors (NYSE: GM), with Ford potentially seeing a 50% stock decline if disruptions last over 120 days.
• Ford’s heavy reliance on Canadian-made engines for its top-selling F-150, accounting for 38% of U.S. sales, makes it particularly vulnerable to supply chain disruptions.
• Prolonged tariffs could trigger regional recessions in the Midwest, driving up unemployment in auto-dependent areas and reversing recent economic recovery trends.
• If a crisis is around the corner, make sure you speak to a financial advisor and make sure you’re positioned to weather the storm. Smart Asset can connect you with 3 serving your area in just a few moments. Click here to get started (sponsor)

Watch the Video

Transcript:

[00:00:04] Doug McIntyre: There were a couple articles over the weekend about the effects of the 25 percent Canada Mexico tariffs on the car industry, the U. S. domestic car industry. Farley, the CEO of Ford, basically said that it’s pretty much like an existential threat to them. You’ve got tariffs, and you’ve got Chinese EVs, so the U.S., GM and Ford. I’m going to tell you something. If we see 25 percent tariffs from both those countries, I think you’re looking at a 50 percent reset on GM and Ford stocks. If it goes on for more than 120 days, because you might say that some of the dealers have vehicles on lots of the average, turn rates about 60 days.

[00:00:51] Doug McIntyre: A typical vehicle comes in from the manufacturer. Usually it’s gone 60 days later on average. I mean that the engines for the best selling vehicle in the United States, the F 1 50 pickup come from Canada. 38 percent of Ford’s U.S. Unit sales are F series. So you tell me what happens to first Ford, but also to GM if they can’t get aluminum, steel cars and car parts into the United States.

[00:01:22] Doug McIntyre: So I understand this is an outrageous statement. Outrageous. But I think you see Ford reset from 10 to five. If this thing goes on for 120 days, it’s just after the UAW deal, After the money they put into EVs, it’s, they just, they, this makes them bleed too much. It’s at that point, you’ve been hit straight through the gut by three huge swords.

[00:01:48] Lee Jackson: Yeah, yeah, yeah. And you would think at one point, and not that it’s, we’ve had this discussion before, it’s not easy to move production. It’s just not that easy. Takes years, 30%, or 38%. It’s just not easy to do. You can’t retool plants that quick. And most of the plants that both Ford and Chevy have in the United States are probably being used unless it’s an EV plant, which they convert back to, internal combustion engine.

[00:02:18] Lee Jackson: But yeah, you will think that they’re gonna really, really press Mexico and Canada and they bought some time till April 1st and you would suspect that Trump is really going to get in there and say, okay, I can pull these back, but you got to really come to the table and do something reciprocal.

[00:02:38] Doug McIntyre: All right. The other thing about this is that a lot of people think of recessions as a national event. Some recessions are regional. These car companies, get hurt badly. You watch how fast the unemployment in the Midwest goes up.

[00:02:53] Lee Jackson: You, we all, because a lot of the factories are there. I mean, Ford has still a ton of factories in and around Detroit.

[00:03:01] Lee Jackson: and, in Ohio, Stellantis (NYSE: STLA) it would be a drag on the economy in that area, and you’re exactly right. And they’re just fighting their way out of the Rust Belt years of, I mean, that, that didn’t end all that long ago and to reverse back to that would be just dreadful for that part of the country.