Al Root

Shares of Ford Motor and General Motors were weak early Monday. Trade-related comments by President Donald Trump are the likeliest reason for the declines.

"It used to bother me [that] they make a part in Canada, a part in Mexico, a part in Europe, send it all over the place, nobody knew what the hell was happening," said President Trump at a Friday afternoon news conference thanking Elon Musk for his work at the Department of Government Efficiency. "If you build a car, make it in America."

President Trump went on to add that while he's given the industry some time -- about a year -- to adjust its parts supply, he expects parts manufacturing to come back to the U.S.

GM and Ford stocks were down 4.7% and 4.4%, respectively, in early trading Monday. Stellantis shares were down 3.4%, while the S&P 500 and Dow Jones Industrial Average were down 0.3% and down 0.5%, respectively.

Trump's tariff policy has loomed over the sector for months. There is a 25% import tariff on car imports. Roughly half the cars sold in the U.S. are imported, mainly from Mexico, Canada, Japan, and South Korea. Manufacturers have started to raise prices to offset tariffs, after existing pre-tariff inventory was sold.

The parts issue looks to be a longer term problem for the industry to deal with. Auto makers including Ford have pointed out the difficult of making all parts in the U.S. a variety of ways. For starters, it makes sense for lower value parts to be made in lower-wage regions, such a Mexico. And it isn't easy to staff plants to, essentially, stamp metal repetitively. What's more, the U.S. doesn't make some things such as LED displays any more.

Low-cost parts, common in both Asia and Europe -- and North America for now -- help auto makers keep new-car prices affordable.

The president's recent comments demonstrate again that investors will be worrying about cost and the impact of affordability on demand for a while yet.

Coming into Monday trading, Ford and GM stocks were up about 2% and 3%, respectively since President Trump's April 2 "Liberation Day" tariff announcement; however, the shares were down 2% and 8%, respectively, since the Nov. 5 election. Shares seem stuck while investors wait for clarity. Investors are really hoping for a change in Trump's policies regarding tariffs on parts.

Write to Al Root at allen.root@dowjones.com

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June 02, 2025 11:33 ET (15:33 GMT)

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