PACCAR Inc. (PCAR) Shares Rally 1.24% on Trump's 25% Truck Tariff Boost

PACCAR Inc. (PCAR) shares surged to a new peak this week, hitting intraday gains of 1.24% as the stock climbed to its highest level since October 2025. The rally reflects renewed investor confidence in the truck manufacturing giant following a pivotal policy shift. On October 1, President Trump announced a 25% tariff on imported heavy-duty trucks, a move that directly benefits PACCAR’s domestic brands, Peterbilt and Kenworth. These two marques hold a 30.4% market share in North America, positioning PACCAR to capitalize on reduced foreign competition as the tariff raises costs for international rivals.

The timing of the tariff aligns with broader industry challenges. U.S. truck sales hit a three-year low in August 2025, sparking concerns about demand. Analysts argue the policy could mitigate this weakness by shifting demand toward domestically produced vehicles, where PACCAR’s premium pricing and cost efficiency—rooted in its U.S.-based manufacturing hubs—offer a competitive edge. The company’s expansion of a Mississippi engine remanufacturing facility further underscores its commitment to leveraging the post-tariff landscape.

While the stock’s recent performance has outpaced broader market trends, valuation debates persist. A $4.42 discount to a $103.50 fair value estimate highlights optimism about PACCAR’s ability to sustain profitability through its high-margin PACCAR Parts and PACCAR Financial Services divisions. These segments generated record $1.72 billion in quarterly revenue and $123.2 million in pre-tax income, respectively, in Q2 2025. However, some models, including a DCF analysis, suggest the stock may be overvalued relative to long-term cash flow projections, reflecting uncertainties around trade tensions and macroeconomic headwinds.

PACCAR’s resilience is further supported by its robust balance sheet, including $1.74 billion in cash from operations in the first half of 2025 and a $9.0 billion investment in innovation over the past decade. Strategic initiatives such as battery-electric truck development and advanced driver assistance systems align with evolving industry trends. Nevertheless, the tariff’s long-term effectiveness—particularly in sustaining sales growth and mitigating supply chain costs—will remain a critical factor for investors to monitor.