Following Donald Trump’s victory in the 2024 US presidential election, the stock prices of several major foreign automakers saw a significant decline.
In the immediate aftermath of the election results, European automakers like BMW, Mercedes-Benz, and Volkswagen experienced drops ranging from 4.3% to 6.5%.
Chinese automakers were also impacted, with BYD’s over-the-counter shares falling 4.5% and Nio’s shares declining 5.3%.
This market reaction is largely due to concerns over Trump’s protectionist trade policies and his past threats to impose substantial tariffs on imported vehicles.
During his campaign, the President-elect had proposed tariffs as high as 60% on Chinese goods and 200% on automobiles made in Mexico.
While Wall Street analysts believe Trump may not follow through to the full extent of his campaign rhetoric, there is an expectation that his administration will take a tougher stance on trade and implement at least some new tariffs.
This trade policy uncertainty is expected to weigh on the performance of automakers with significant exposure to the US market.
“We anticipate a tougher approach to trade and tariffs, although we believe policy changes will be milder than announcements in order to minimize business disruption,”
said John Murphy, an analyst at Bank of America.
Wolfe analyst Emmanuel Rosner noted that the
“trade uncertainty could weigh on Auto stocks broadly, as we saw from 2018-early 2020 during the height of the US-China trade war and NAFTA negotiations.”
However, he does not expect “aggressive new tariffs” of 100% or more to be implemented under a Trump administration.
As the incoming president prepares to take office, global automakers will be closely monitoring the new administration’s trade policy actions and rhetoric, which could have significant implications for their business operations and stock performance in the coming years.
