00:00 Speaker A
Something I’ve been trying to think to to piece through here and try to understand is you have a 25% um tariff on autos and light trucks. You have a 25% tariff from Canada and Mexico imports into the US. Although there’s are some exceptions for USMCA. Could we see a scenario where some of the vehicles being imported to the US get a 50% tariff?
00:31 Speaker B
No, I think that’s too high. Uh because what they announced is basically a tariff on all non-USMCA cars. And then there’s a second tariff where you actually within the USMCA can offset any value that you create in the US.
01:13 Speaker A
Got it.
01:15 Speaker B
Dan, who in your coverage universe? What are the names that are sort of most at risk of this?
01:21 Dan
Look, Ford and GM. Uh that’s the one. If we kind of parse this through, even with raising prices, lower volumes, the effect could be almost 30% negative to what they guided to this year. And that’s clearly not what we’re seeing in the market yet. And so there’s still some downside risk to these stocks.
02:00 Speaker A
Why aren’t we seeing it in the market? Are investors assuming that this is not going to go into effect or not going to last very long? And is it a mistake to assume that?
02:16 Dan
I think the market’s slowly shifting. So two weeks ago, everybody would have told you this is four to six weeks, it’s not going to be longer. There was a very high confidence in the market this would not extend. This has really shifted since the press event we had yesterday. And now it’s more, well, maybe the administration will find some way within the USMCA to actually carve out a little bit more freedom for the US automakers, which then puts them at a still bad position, but relatively better than Toyota or Mercedes or some of the foreign makers.