By Jon Sindreu
Tariff relief for automakers should be good news for investors. The fact these companies seemed blindsided is a reminder that they face a difficult and uncertain future.
General Motors stock fell early Tuesday, despite the Detroit-based company beating Wall Street estimates for quarterly profit and revenue, thanks to a faster-than-expected pickup in North America.
Executives said earlier guidance for 2025 was no longer valid given tariffs, and paused share buybacks. They also postponed an analyst conference call to Thursday, citing "recent reports regarding updates to trade policy."
Meanwhile, Commerce Secretary Howard Lutnick has confirmed Trump will announce on Tuesday a softening of auto tariffs.
U.S. companies paying 25% tariffs on imported vehicles may be exempted from other duties, such as those on steel and aluminum. They may also be reimbursed for parts tariffs, which were set to start May 3. Rebates will initially run to as much as 3.75% of the value of a U.S.-made car, and will later be phased out.
In theory, this should be well-received by markets. Yet shares in Ford, for example, also fell moderately Tuesday. Auto suppliers such as Aptiv, BorgWarner and Gentex didn't experience a big pop.
The bitter truth is that tariffs still imply a big increase in costs and complexity for carmakers, just as consumers are starting to feel the pinch.
The other issue is that GM apparently didn't see the change coming, and needs time to reassess its outlook: It is another sign of disconnection between the Trump administration and America's industrial champions, which should be the ultimate drivers of a reshoring policy.
Continued back-and-forth in policymaking makes it hard for firms to plan ahead, undercutting the tariffs' aim of encouraging domestic investment in manufacturing.
Auto stocks have outperformed the S&P 500 in the recent rally. Truly jump-starting them will take a lot more than minor policy tweaks.
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(END) Dow Jones Newswires
April 29, 2025 09:50 ET (13:50 GMT)
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