On May 23, the Trump administration initiated a Section 232 investigation into auto imports. According to the U.S. Department of Commerce, this “investigation will determine whether imports of automobiles, including SUVs, vans and light trucks, and automotive parts into the United States threaten to impair the national security as defined in Section 232.”
Hurting investors’ sentiments
Since the section 232 investigation into auto imports began, many industry experts and automakers have warned that the tariffs could badly affect the auto industry. At a time when US light vehicle sales are already softening after hitting an all-time high in 2016 of 17.55 million units, US auto tariff concerns are hurting auto investors’ sentiments.
In June, the two largest US automakers (XLY), General Motors (GM) and Ford Motor Company (F), lost 7.7% and 4.2%, respectively. The Italian American auto giant Fiat Chrysler Automobile (FCAU) went down by 18.7% against the S&P 500 Index’s minor gains of 0.5%.
In contrast, American electric car maker Tesla (TSLA) jumped up by 20.4% last month. While America’s escalating trade war with China is not good news for TSLA’s future plans, investors’ high expectations from the company’s Q2 production and deliveries sent its stock soaring.
On July 2, Tesla revealed that it had met its Q2 Model 3 production rate guidance of 5,000 units a week. Read Tesla Hits Q2 2018 Model 3 Production Goal, Stock Falls to learn more.
Read on to the next part where we’ll cover different aspects of proposed auto tariffs and why these tariffs could be the biggest concern for automakers at the moment.