Shares of major automakers, including GM, Ford, and Stellantis, took a hit on Tuesday as President Trump's 25% tariffs on imports from Canada and Mexico officially took effect. The auto industry is feeling the pressure, with stocks of Detroit-based manufacturers like GM, Ford, and Stellantis all trading lower. These new tariffs come at a challenging time for the industry, which has already been grappling with the combined effects of rising prices and high interest rates that have dampened U.S. car sales in recent years. With the added burden of tariffs, automakers are facing further obstacles as they attempt to maintain profitability.

The automotive sector is particularly vulnerable due to the high level of imports in the U.S. car market. Last year, the U.S. imported $279 billion worth of car-related goods, with specific automakers relying heavily on foreign production. For example, GM, the largest U.S. automaker, manufactured nearly 900,000 vehicles in Mexico alone last year. Economists are warning that these tariffs could send shockwaves through the market, leading to higher prices for consumers and potential disruptions in the supply chain.

A recent study from the Anderson Economic Group underscores the potential impact on U.S. car buyers. The study predicts that some vehicles could see price increases of up to $12,200 due to the tariffs. Full-size SUVs might experience a $9,000 price hike, while pickups could see an $8,000 bump. Smaller cars are projected to rise by more than $6,000. This could make new cars even less affordable for consumers already facing financial pressure. Nearly every major automaker will be affected by these tariffs. For instance, up to a quarter of the components in Tesla’s 2025 models come from Mexico, and Toyota and Honda each manufacture about 40% of their North American cars in Canada and Mexico. As a result, the tariffs are expected to have a wide-reaching impact across the industry, further complicating the landscape for both manufacturers and consumers.

Airline stocks are taking a major hit as President Trump’s 25% tariffs on imports from Canada and Mexico begin to ripple through the economy.

Shares of major carriers such as JetBlue, Delta, and United Airlines dropped more than 5% in Tuesday’s afternoon trading. Even industry giants like Boeing and Airbus, which are heavily impacted by the tariffs, saw declines in their stock prices. Investors are increasingly worried about how these tariffs will affect airline operations, particularly with the potential for higher production costs, rising ticket prices, and a reduction in discretionary spending as a result of economic uncertainty.

While tariffs might seem like a distant concern for airlines at first glance, the reality is that they could have a significant impact on the airline manufacturing supply chain. If the tariffs continue for an extended period, airlines may face disruptions that could drive them to lease more jets rather than purchase new ones. Increased demand for leased aircraft could push up leasing rates, ultimately resulting in higher ticket prices for travelers. Budget airlines, which operate on slimmer margins and have been struggling in recent years, could be hit hardest by these changes.

The effects of the tariffs on airlines are compounded by a number of other factors, including a potential decline in Canadian visitors to the U.S. Canada has long been the top source of international visitors, with more than 20 million visits recorded last year. However, as the Canadian dollar weakens due to the tariffs, Canadian travelers may find it more expensive to visit the U.S., further contributing to the turbulence in the airline industry. According to the U.S. Travel Association, a 10% drop in Canadian tourism could result in a loss of up to $2.1 billion in spending, adding to the financial challenges facing the airline sector.

Additionally, production costs for aircraft manufacturers could also rise due to the 25% tariff on imported aluminum. This could increase the cost of producing a narrow-body aircraft by as much as $2.5 million. Though many contracts for materials are negotiated well in advance and may take years to reflect in the bottom lines of carriers, the impact could still be significant. As airlines brace for these challenges, it seems the sky might not be as clear as it once was for the aviation industry.

As of today, the United States has imposed a 25% tariff on everything it imports from Canada and Mexico, along with a 20% tariff on many goods from China.

In retaliation, Canada has placed its own tariffs on over $100 billion worth of American goods entering its borders. Canada, as the U.S.'s second-largest trading partner, plays a significant role in the flow of goods between the two countries. In 2024 alone, the U.S. exported $349 billion worth of goods to Canada, which accounted for about 17% of all U.S. exports, while importing $413 billion in goods from its northern neighbor.

If you’re wondering how this trade disruption might affect your daily life, it’s worth considering some of the everyday items that are likely imported from Canada—and are about to get more expensive. Imagine starting your day with a cup of coffee and a morning newspaper. If you’re holding that paper, there’s a good chance it was printed on Canadian newsprint. In fact, a staggering 99% of the newsprint imported into the U.S. comes from Canada.

As you sit down to breakfast, you pour some sweet maple syrup on your pancakes. But don’t go overboard, because nearly 100% of the syrup we import comes from Canada, where the maple leaf reigns supreme. And that savory smell of bacon wafting from the kitchen? You’re likely smelling Canadian bacon—98% of the "bellies and cuts" of swine imported into the U.S. come from Canada.

After breakfast, you hop into your 2024 Ford Edge, and it’s important to note that your car likely crossed the U.S.-Canada border multiple times during its manufacturing process. Thanks to the North American Free Trade Agreement (NAFTA), carmakers have spread their supply chains across the continent. In fact, 28% of your car was manufactured in the U.S. and Canada, and it was assembled in Canada.

Later, as you drive to work, your gas light comes on. You head to a gas station, and you might be surprised to learn that Canada is the largest source of imported petroleum to the U.S. In 2024, the U.S. imported $96.5 billion worth of petroleum from Canada. It’s not just the gas station prices that are feeling the impact, either.

At work, you get a call from your contractor, who’s doing an extension on your house. Unfortunately, the price for your project just went up 25%. The reason? Most of the lumber your contractor will use comes from Canada, and a whopping 72% of construction lumber in the U.S. came from Canada in 2024.

By the end of your day, you meet a friend for dinner at your favorite pub. You order a burger, fries, and a cold beer. As you look at the menu prices, you realize everything seems 25% higher than usual. It hits you that Canada is also the largest source of beef imports to the U.S. Last year, the U.S. imported $2.5 billion worth of fresh or chilled beef from Canada, making up 42% of the total imports.

Then, as you munch on some crispy fries, you realize that Canada is the source of 86% of the frozen french fries imported into the U.S. It doesn’t stop there—when you crush your empty beer can, you recall that the U.S. imported $11.3 billion worth of Canadian aluminum in 2024. In fact, Canada supplied 41% of all the aluminum imported to the U.S. last year.

These are just a few examples of the everyday items affected by the new tariffs on Canadian imports, and it’s clear that the ripple effect of these levies will reach far and wide. If these price increases have you feeling the pinch, just wait until you see what might be in store from Mexico as well.

Quick Signal:

Shares of major automakers are showing a slight recovery this Wednesday morning after taking a hit on Tuesday due to tariff concerns. General Motors (GM), Ford (F), and Stellantis (STLA) are all seeing positive movement, with gains of 4.00%, 3.23%, and 6.48%, respectively. Even Toyota and Honda, which had also been impacted by tariff fears, are experiencing an uptick. The shift in market sentiment can largely be attributed to comments made by U.S. Commerce Secretary Howard Lutnick, which fueled optimism among investors.

Lutnick spoke to Bloomberg Television, hinting at the possibility of tariff relief for certain industries, including the auto sector, which could come as soon as Wednesday afternoon. He mentioned that products compliant with the US-Mexico-Canada Agreement (USMCA)—the trade deal established under President Trump’s first administration—could be exempted from the steep tariffs currently in place. Lutnick specifically pointed to American carmakers such as Ford, GM, and Stellantis, which are all USMCA-compliant, as potential beneficiaries of this tariff relief. This prospect sparked a turnaround in the stock prices of these automakers.

This latest development echoes the uncertainty and volatility seen last month, when the auto sector saw dramatic shifts in stock prices tied to fluctuating tariff expectations and delays. The industry remains highly sensitive to these tariff negotiations, and any changes to the trade policy could significantly affect the financial outlook for major automakers. As the situation develops, all eyes will be on how the U.S. government handles the auto tariff issue in the coming days.

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