U.S. President Donald Trump’s 25% tariffs on imported vehicles and parts may not be a permanent policy, according to Wells Fargo (NYSE:WFC) analysts. While the move has already rattled the automotive sector, analysts suggest that Trump could walk back the policy in exchange for trade concessions.
Auto Industry Faces Major Uncertainty
Trump’s tariff announcement, which penalizes foreign car and light truck imports, has fueled concerns that domestic vehicle prices will rise. Over the weekend, Trump dismissed these concerns, stating he “couldn’t care less” if automakers raised prices for consumers.
However, Wells Fargo analysts, led by Colin Langan, warned in a note to clients that these tariffs create major investment uncertainty for the auto sector:
Car sales volumes could decline by ~11% if higher costs are passed to consumers.
Pre-tax earnings for the auto industry may drop by $67 billion.
The “Big 3” U.S. automakers—Ford (NYSE:F), General Motors (NYSE:GM), and Stellantis (NYSE:STLA)—could see income losses of $6 billion to $12 billion.
Global supply chain disruptions may also impact U.S. vehicle production.
Given these risks, Wells Fargo sees auto stocks as “almost un-investable” until there is clarity on Trump’s long-term trade stance.
April 2: Key Date for U.S. Trade Policy
Trump’s auto tariffs are part of a broader “reciprocal trade” strategy that will be further detailed on April 2 at 15:00 ET (19:00 GMT). This announcement—dubbed “Liberation Day”—will likely introduce new across-the-board trade levies targeting nations with U.S. trade deficits.
A Wall Street Journal report suggested that Trump is considering even higher tariffs against a wider range of countries as he seeks to correct perceived U.S. trade imbalances.
Economic Impact: Inflation and Growth Concerns
While Trump’s trade agenda is designed to protect domestic industries, economists warn that it may fuel inflation and slow growth. Recent data shows:
Consumer spending rebounded less than expected in February.
Core inflation rose at its fastest pace in 13 months.
A survey of 12-month consumer inflation expectations hit a 2.5-year high in March.
These developments could pressure the Federal Reserve to rethink its rate-cut plans, as a stagflationary environment—stagnant growth with rising inflation—remains a key risk.
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With Trump’s April 2 tariff announcement poised to reshape U.S. trade policy, investors and policymakers will closely watch its market impact in the coming weeks.
