MW With Trump's tariffs paused, 'Big Three' automakers may race to build inventories

By Claudia Assis

What do you do when you get another reprieve? Build more.

What might the "Big Three" U.S. automakers do now that they have a reprieve from tariffs imposed on Canadian and Mexican products?

The answer for Ford Motor Co. $(F)$, General Motors Co. $(GM)$ and Stellantis NV (STLA) is likely to be build up inventories as fast as they can, said Jessica Caldwell, an analyst with Edmunds.com.

The Trump administration on Wednesday announced a pause in tariffs for automakers, handing the stocks of all three carmakers their best sessions in months.

Ford shares ended at an one-month high, up nearly 6% for their largest one-day percentage rise since April 22, 2024; GM shares, up more than 7%, had their largest one-day percentage increase since Oct. 22, 2024; and Stellantis shares, up more than 9%, had their best session since March 9, 2022.

Don't miss: Trump's tariffs, whether implemented or not, have already hurt the U.S. auto industry

Many in the industry believe the impending tariffs, averted for now, have already hurt the auto industry, where business decisions are measured not in months, but years, and certainly not in weeks.

Vehicles as well as parts, big and small, crisscross North America, likened recently by one expert as "one big car factory."

President Donald Trump late Monday said the tariffs were "all set," appearing to brush off the possibility of another deal, after the tariffs were paused for the first time last month. Wednesday's reprieve came as Trump spoke with executives from Ford, GM and Stellantis.

This second tariff pause shows "some flexibility from the White House and its recognition of the importance of the health of the industry," Caldwell said "However, a temporary pause does little to ease the long-term uncertainty automakers are facing."

In the short term, "manufacturers may need to ramp up production and stockpile inventory as a hedge against potential tariffs," but that is an "expensive and risky move" that could lead to too much inventory if the tariffs don't take effect, she said.

"Being stuck in this limbo presents challenges for the industry and could have ripple effects on consumer confidence" at a time when new-car prices are at record highs and high interest rates are also a concern, she said.

According to Edmunds.com, the average price of a new car sold in the U.S. was $48,118 in January. The annual percentage rate for financed new vehicle purchases hit 7.2% in February, with the average total interest paid for financed new vehicles at $9,382.

-Claudia Assis

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March 05, 2025 17:28 ET (22:28 GMT)

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