Trump Pushes Harder For Americans To Buy Fords And US Brands

For a few hours, it looked like Donald Trump had told car makers not to raise prices for buyers due to the new 25% tariffs on imported cars and parts. This would squeeze margins particularly hard on brands like Mercedes and BMW. The president either changed his mind, or the price cap was never a policy. Trump told NBC he did not care about car price increases at all. This will favor American manufacturers that may not have to raise prices.

Now that the president has said he “couldn’t care less about the price increases by car manufacturers that mostly make cars and parts outside the US,” companies like Mercedes need to raise prices or could lose money on every car they sell. Trump believes that US cars will be more attractive because they can keep prices as they are and still make money.

Ford (NYSE:F)  is the best case in point. Eighty percent of its cars and the parts used to build them are made in the US. The same is not true of companies like GM (NYSE: GM) and Stellantis (NYSE: STLA), which make Jeep, Ram, and Dodge vehicles. CBS estimates that some RAM trucks need increased prices from $80,000 to $100,000 to hold margins.

The president’s point is probably accurate. Buyers will gravitate to car models that do not have higher prices or on which price hikes are modest. Models like the RAM will become extremely hard to sell. The same is true with many Mercedes and BMWs.

The news also benefits Ford’s shareholders. The news about tariffs drove its stock down 5%. It probably shouldn’t have

Trump added a message for car companies when he talked to NBC. “The message is congratulations: if you make your car in the United States, you will make a lot of money. If you don’t, you’ll probably have to come to the United States because if you make your car there, there is no tariff.”

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