Al Root
Tariffs are starting to bite the car business and shares were down early Monday.
Ford Motor has stopped importing cars to China, according to people familiar with the situation. The halt includes the Mustang and F-150 Raptor, which are made in Michigan, and the Lincoln Navigator, which is made in Kentucky.
After a couple of rounds of mutual escalation, the U.S. is charging tariffs of 145% on most goods from China. Beijing is imposing a 125% tariff on U.S. goods. That's high for any product, let alone a car costing tens of thousands of dollars.
Ford is still shipping parts -- including engines made in Ohio and transmissions made in Michigan -- to China.
Ford stock was down 1.3% in premarket trading at $9.51 a share, while S&P 500 and Dow Jones Industrial Average futures were down 1.1% and 1%, respectively. General Motors stock was down 0.8% at $44.20.
GM is facing import tariffs on cars it imports from South Korea and China. The Buick Envision is made in Shanghai, and the Encore is made in Bupyeong, South Korea. Those were the two top U.S. sellers for the brand in the first quarter, with combined sales of about 36,000 units. GM sold almost 700,000 cars in the U.S.
Barclays analyst Dan Levy recently wrote that the import tariff from South Korea totals 27.5%, comprising a 25% sectoral tariff and a 2.5% existing tariff. The import tariff on Chinese cars isn't 145%, he says, but it is high at 47.5%. That's the 35% sectoral tariff, a 20% punitive tariff due to fentanyl imports, and a 2.5% existing tariff.
Ford, which makes more cars in the U.S. than any other traditional auto maker, has a similar problem. It's the Lincoln Nautilus, which is manufactured in China.
It might seem odd that Ford ships cars to the U.S. from China, and vice versa. Each vehicle, however, has separate tooling and parts. It's far more efficient to make all the Mustangs in one facility, and all the Nautilus cars in another, and then send them where they need to go, rather than making some of each in both the U.S. and China.
Tesla has run into a similar problem. It's no longer selling its lower-volume, more-expensive Model S and X vehicles in China. Those are made in Fremont, Calif.
It's a complicated situation. One simple outcome, however, is that tariffs are driving costs up around the globe.
Coming into Monday trading, Ford and GM shares were down 9% and 17%, respectively, since the Nov. 5 presidential election.
Write to Al Root at allen.root@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
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April 21, 2025 07:50 ET (11:50 GMT)
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