Trump's Auto Tariff Tsunami! Will Your Car Cost You an Arm and a Leg?!

The Auto Apocalypse... or Not?

Right listen up! The world's gone mad hasn't it? Trump slaps 25% tariffs on foreign auto imports and everyone's running around like a chicken with its head cut off! But hold on a minute. While some auto stocks took a tumble – Volkswagen Mercedes BMW Stellantis Ford and GM to name a few – it wasn't quite the doomsday scenario everyone expected. Remember improvise adapt overcome! That's the Bear Grylls motto and it applies to the stock market too apparently. Sometimes you've got to eat a bit of humble pie... or in this case maybe just a slightly cheaper car. But the question is are we going to survive?

Canada and Mexico: The Lucky Few

Turns out there's a lifeline! Canada and Mexico got a golden ticket an exemption from these tariffs. Seems like someone remembered that a whole lot of carmakers have factories up north and down south. It's like finding an oasis in the desert a perfectly good albeit slightly used caribou carcass when you're starving. RBC Capital Markets chimed in pointing out that these exemptions are through CUSMA/USMCA compliant trade. They also pointed out that tariffs from Canada are still set to rise on Thursday so even the lucky few get a little nip. So while the world burns at least a couple of countries get to keep driving relatively affordable cars. Lucky them!

Trump's Tariff Tango: One Step Forward Two Steps Back?

Trump's been all over the place with these tariffs. One minute he's announcing them the next he's… well probably tweeting about something else. A 10% baseline tariff across the board with even higher targeted tariff rates of 34% on China 20% on the European Union and 46% on Vietnam. It's enough to make your head spin! It's like trying to build a shelter in a hurricane. Just when you think you've got it figured out the rules change. But hey that's life in the wild isn't it? "The long awaited U.S. reciprocal tariffs announced have been large and broad based but critically exempt Canada and Mexico (at least for now) through CUSMA/USMCA compliant trade," economists at RBC Capital Markets said. But the main thing is that we should be ready for anything life throws at us!

Uncertainty: The Only Certainty

Rico Luman from ING that clever Dutch economist says investors are just happy to have some clarity. Which is like saying you're happy to only have one broken leg instead of two. He still thinks there's "huge uncertainty" about the impact of Washington's "reciprocal tariff" policy. Translation: We're all still driving blind. But remember even in the darkest cave you can find your way out... or at least something to eat. Speaking of food tariffs will trigger price hikes and fall in car sales. Much of the impact is already priced in stock prices but the impact will be felt in terms of prices of cars.

The Automakers' Pain Threshold

Thomas Besson from Kepler Cheuvreux thinks investors will start ditching auto stocks faster than a bad batch of river water. He's talking about a "substantial hit" to automakers like Porsche Stellantis and Volvo. Even the big boys like Mercedes BMW and Volkswagen aren't safe. Renault is the only one immune to this news lucky them! It's a jungle out there folks. Only the strong survive. The important thing is to keep your wits about you and never give up. Always look on the bright side! If you can find it.

Time to Adapt and Overcome!

So what's the takeaway? Trump's tariffs are a wild card but not a total knockout. Some automakers will suffer some will adapt. And we the consumers might just have to pay a little more for our rides. It's a tough situation but remember every challenge is an opportunity. Maybe it's time to learn how to build a car from scratch using only the materials you can find in your backyard. Or maybe just stick to public transport. Either way stay sharp stay resourceful and never give up! Now if you'll excuse me I'm off to find a new way to start my car with just a stick and some dried leaves... cheers!