Following President-elect Donald Trump’s announcement that his tax plan would impose 25 % on imports from Canada and Mexico, General Motors and Stellantis shares fell on Tuesday night.
Due to numerous companies moving their manufacturing facilities overseas to lower the cost of producing cars, the global automotive industry may be significantly impacted by these tariffs.
In this Wednesday, Jan. 4, 2017, file photo, vehicles enter the General Motors assembly grow in Villa de Reyes, outside San Luis Potosi, Mexico, where the Aveo and Trax cars have been produced since 2008. For today, some of the United States’s most famous cars and trucks are made in Mexico. Some U. S. car clients have benefited from Mexico’s development as a generation hub. However, Mexico’s growing share of the auto market is a sore spot for President-elect Donald Trump, who has threatened to impose border taxes on Mexican imports to force companies to make cars in the U. S. ( AP Photo/Rebecca Blackwell, File )
Trump’s proposed plan would inflict 25 % tariffs on Mexico and Canada. Imports from Mexico and Canada account for 26 % and 23 % respectively. General Motors and Stellantis, Chrysler’s family business, produce remarkably common pickup trucks in Mexico, causing its stocks to fall. Mexico is home to almost every carmaker with a US presence.
GM has five manufacturing flowers in Mexico, and Stellantis has four. GM’s shares fell the most, dropping 7 % during early trading, and Stellantis saw a 4 % fall in stock. Toyota and Honda stock dropped 1 %, while Ford shares dropped 2 %, respectively.
Prior to Trump’s election as president, the region’s free trade agreement was protected by the 1994 North American Free Trade Agreement, which he replaced with the United States-Mexico-Canada Agreement. Some people saw the news of the tax program as a renegotiating tactic to help other nations reach an agreement, and a renegotiation of the USMCA was anticipated.
According to Carlos Capistran of Bank of America Securities,” We think that Trump will use the threat of tariffs to sway other nations ‘ economic and political results,” Capistran told NBC. We anticipate that Canada and Mexico will engage in negotiations to avert tariffs on the items listed above.
Trump and Democrats agree that the trade agreement needs to be renegotiated to keep ahead of potential plans to move production into Mexico and bring its products into the United States, such as BYD, a Chinese-based company that produces and sells travel technology.
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” They think they’re going to make their cars ]in Mexico], and they’re going to sell them across our line, and we’re going to take them, and we’re not going to charge them tax”, Trump said on election night. ” We’re going to charge them — I’m telling you right now — I’m putting a 200 % tariff on, which means they are unsellable in the United States”.
Trump’s plan included numerous price proposals, including raising tariffs on imported automobiles from Mexico and increasing taxes on Western vehicles.
