Auto ETFs Plunge as Trump's 25% Tariff Hits Overseas Vehicles

BOOM! The market just got a jolt from President Trump’s latest move. He’s slapped a 25% tariff on all vehicles and auto parts not made in the United States, and the auto ETFs are tumbling like a house of cards. This is a game-changer, folks, and you need to pay attention!



WHY IS THIS HAPPENING?

Trump’s tariffs are aimed at protecting America’s automobile industry, which he claims has been undermined by excessive imports. The 25% tariff will be applied to imported passenger vehicles and light trucks, as well as key automobile parts. This move is part of a broader strategy to ensure the U.S. can sustain its domestic industrial base and meet national security needs.

WHO’S GETTING HIT THE HARDEST?

The Big Three automakers—Ford, General Motors, and Stellantis—are in the crosshairs. General Motors, for instance, makes just 45% of its vehicles in the U.S., leaving 55% of its lineup exposed to tariffs. Stellantis, with brands like Jeep and Ram, is similarly vulnerable. A $80,000 RAM truck could cost $100,000 once it reaches the U.S. under the new policy. Ouch!

WHAT ABOUT TESLA?

Tesla, the electric vehicle giant, is expected to fare better. Most of its parts are sourced domestically, and its vehicles are made in the U.S. But even Tesla isn’t entirely unscathed. CEO Elon Musk acknowledged that the tariffs will still have an impact on the price of parts in Tesla cars that come from other countries. So, even the king of EVs isn’t immune!

HOW ARE THE ETFs REACTING?

Auto-focused ETFs are taking a beating. The Global X Autonomous & Electric Vehicles ETF (DRIV) and the First Trust Nasdaq Global Auto Index Fund (CARZ) are both down significantly. These ETFs hold a diversified basket of stocks engaged in the electric and autonomous vehicle space, including Ford and General Motors. If you’re holding these ETFs, buckle up—it’s going to be a bumpy ride!

WHAT SHOULD YOU DO?

1. Stay Away from Highly Exposed ETFs: If you’re holding ETFs with significant exposure to foreign-made vehicles and parts, consider selling. The tariffs are going to hit these hard, and the market is already reacting negatively.

2. Look for Domestic Plays: Focus on companies that manufacture in the U.S. and source parts domestically. Tesla is a good example, but there are others. Do your homework and find the hidden gems!

3. Prepare for Volatility: The market hates uncertainty, and these tariffs are a big unknown. Expect more volatility in the coming weeks and months. Stay nimble and be ready to act!

THE BOTTOM LINE

Trump’s tariffs are a seismic shift for the auto industry, and the ETFs are feeling the tremors. This is a no-brainer—get out of the way of the falling knives and find the stocks that will thrive in this new landscape!



BOO-YAH! This is a market in flux, and you need to be ready to pivot. The tariffs are here, and they’re going to shake things up. So, buckle up and get ready for the ride of your life!