Ford (F) And GM’s Stocks Are About To Get Tariff Whipsawed Again. Just Wait.
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24/7 Wall St. Key Points:
- Ford (NYSE: F) and General Motors (NYSE: GM) stocks have held up despite fears of 25% tariffs on cars and parts, as investors anticipate they may avoid the worst-case scenario.
- A prolonged tariff war could severely disrupt U.S. auto supply chains, given the heavy reliance on parts and assembly in Mexico and Canada.
- Investors must weigh the risks of a potential recession and escalating tariffs, as either scenario could make auto stocks unattractive in the near term.
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Transcript:
[00:00:04] Doug McIntyre: Let’s look at the big two car companies for a second, because they’re going to be whipsawed, the stocks. First, it looked like the tariffs, the 25 percent tariffs on cars and car parts were going to beat them up. The inventory of cars for GM and Ford in the United States was going to disappear within a matter of two or three months.
[00:00:27] Doug McIntyre: Some of the dogs that people don’t want to buy might be around. But at that point. They’d be in really deep trouble. They make money on short supply for 90 days and then you don’t have any cars to sell. Now they’ve been given a reprieve for, for 30 days. And those stocks have actually looked pretty good based on the fact that, you know, it may be that they’re going to slip the hangman’s noose.
[00:00:54] Doug McIntyre: But now, as you look at the effects of the fear of tariffs, just forget about the fact that there are some actual tariffs. Just the fear of tariffs right now is tearing some of these stocks apart. So I think if you, if you’re interested in Ford and GM, you have to ask yourself a question, is the status quo, which is that they can make cars and sell them in effect, or is there a decent chance in three weeks?
[00:01:24] Doug McIntyre: That you’re in the midst of a real tariff war and if you’re in the midst of a real real tariff war The ability to get cars and car parts into the United States from Mexico and Canada is going to go down to zero
[00:01:37] Lee Jackson: Yeah, and I’ve seen people discuss this if you try to sell an American car into Europe, you know, they have a vat tax and all these other taxes that are de facto tariffs where when you ship a BMW into here, there’s none of that here, you know, so I think that’s the argument that the government, the Doge and Trump and everybody’s making is that, you know, we got to even the score on that and it’s probably good.
[00:02:01] Lee Jackson: But boy, the short term pain could be difficult because so much is made for the big three in Mexico and Canada.
[00:02:10] Doug McIntyre: Well, so for right now, Ford’s holding its own in the market. There’s a big market sell off. Ford is flat. So there is an anticipation among a lot of investors that Ford and GM are going to be okay if the, if the market sentiment was that they are in big trouble, you wouldn’t on a day like today when everything else is down, except for, you know, Altria (NYSE: MO), Verizon (NYSE: VZ).
[00:02:34] Doug McIntyre: There is a sense in the market today that these stocks are in good shape, that there aren’t going to be tariffs, that they’re going to be able to sell cars, that you’re not going to have a recession. So that’s a lot of ifs. So if I’m an investor, I’ve got to ask myself, am I willing to cross stuff off the list?
[00:02:51] Doug McIntyre: Recession cross that off, tariffs cross that off. If you can cross everything bad off the list, then maybe these things are buys. If you think even one of the things is going to happen, then you should stay away from it. If you think there’s going to be a recession, you think there’s going to be tariffs.
[00:03:08] Doug McIntyre: It would be a good time to stay away from it.
[00:03:10] Lee Jackson: Yeah, you’re probably right and and and again I I think the president uses a lot of this as just a negotiating tool and you know that’s what the media always says at least and I think that’s true to some point and like you said when they run out of inventory, that’s when things get dicey. Especially when it’s American companies that are based here and have a ton of production here. They just have so much in Canada and Mexico that, in a perfect world, they’d be able to move some back, but I mean, the kind of facilities needed to build automobiles or put them together, it just can’t slap that up in a minute and start production.
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