Raytheon awarded $71 million in Navy contracts for missile systems
Investing.com - The total cost of President Donald Trump’s new tariffs on automotive imports could amount to around $100 billion, or roughly 14% of the sector’s annual revenues, according to calculations from analysts at Bernstein.
In a note to clients, the brokerage said, when dividing that figure by the approximately 16 million cars purchased in the U.S. every year, the levies would translate into about $6,250 in additional cost to every vehicle.
The analysts led by Daniel Roeska noted that the White House’s statement that it could collect $100 billion in revenue from the duties was also "higher than our estimates."
Trump said he plans to slap the tariffs on global automotive imports into the U.S. starting from April 3, following through on a prior pledge to place a trade tax on overseas car and truck manufacturers.
Speaking at the Oval Office on Wednesday afternoon, Trump added that the duties will apply to “all cars not made in the U.S."
The statement appeared to exclude possible carve-outs for Mexico and Canada, two countries that play a pivotal role in the process of car construction in North America and have a free-trade agreement with the U.S. that was signed during Trump’s first term in office.
Shares in American automakers, including Ford, General Motors (NYSE:GM), and Jeep-parent Stellantis (NYSE:STLA), sank in premarket trading on Thursday. However, the Bernstein analysts argued that U.S.-based auto firms may "see a lower impact" from the tariffs than their international rivals.
Carmakers that "do not produce cars in the U.S., like Mitsubishi or JLR, will likely face prohibitive levels of tariffs severely reducing U.S. profitability," they flagged.
Trump has argued that his tariffs are necessary to offset lost revenues from proposed tax breaks and help bring industrial jobs back to the U.S. It remained to be seen what responses U.S. trading partners would roll out, although leaders from Canada and the European Union criticized Trump’s pronouncement.