Breaking news! Trump announces: A 25% tariff will be imposed on all imported cars! The U.S. auto sector slumped in after-hours trading, with General Motors falling more than 7% and Ford falling more than 4%.

Breaking news! Trump announces: A 25% tariff will be imposed on all imported cars! The U.S. auto sector slumped in after-hours trading, with General Motors falling more than 7% and Ford falling more than 4%.

• Trump announced in a campaign speech that if elected president, he would impose a 25% tariff on all imported cars (the current tariff rate is 2.5%).
• Market reaction: The US auto sector plunged after hours. General Motors (GM) fell by more than 7%, Ford (F) fell by more than 4%, and Tesla (TSLA) fell by 2%.
• Scope of impact: Major auto-exporting countries such as the European Union, Japan, South Korea, and China will be hit.

• Ford and General Motors may gain market share due to the price increase of imported cars, but they are still affected by relying on the global supply chain (such as Mexican factories).
• The export cost of Tesla's Model 3/Y produced in China to the US has soared, and it may be forced to accelerate its localization in the US.
• European automakers face a "double blow".
• The European Union has warned that it will impose retaliatory tariffs on the US (targeting Boeing, agricultural products, etc.).
• Volkswagen, BMW and other companies may accelerate the construction of factories in the US (such as BMW's South Carolina factory).
• The "going global" of Chinese electric vehicle enterprises is blocked.
• The strategy of BYD, NIO and other companies to enter the US market through Mexico faces challenges (Trump said he will block the "re-export loopholes").

1. Historical review: The lessons of the 2018 auto tariff threat

   In 2018, Trump threatened to impose a 25% tariff on imported cars, but in the end, only tariffs on steel and aluminum were increased, and the auto tariff was not implemented.

   But this time it is different:

   Trump clearly takes trade protection as a core policy in his campaign platform.

   The United Auto Workers (UAW) strongly supports it, and the Biden administration may also follow up with some measures.
2. Possible future developments

   (1) If Trump is elected (the policy is implemented in 2025)

   The global auto supply chain will be reconstructed: Automakers are forced to build factories in the US (such as Toyota has announced additional investment in the US).

   Consumers face price increases: The average price of new cars in the US may increase by $5,000 - $8,000 (predicted by Kelley Blue Book).

   Chinese automakers turn to Southeast Asia: Export through ASEAN countries such as Thailand and Indonesia, and use low - tariff agreements.

   (2) If Biden is re - elected

• May maintain the status quo (2.5% tariff), but under pressure from the UAW, there is no exclusion of the possibility of partial tariff increases.

1. Investment advice
   Short - term hedging: Reduce holdings of stocks of automakers that rely on imported cars (such as Toyota, Volkswagen), and pay attention to companies with a high degree of localization (such as Tesla).
   Long - term layout:
   US auto supply chain stocks (such as lithium mines, auto parts manufacturers).
   Mexican industrial real estate (automakers may accelerate their relocation).