Auto tariffs – Game on
Last week, President Trump signed an executive order introducing tariffs on automobiles and automobile parts imported in the United States. The new policy introduces a 25% tariff on the value of imported cars and components, excluding USMCA countries. For this group, which includes Mexico and Canada, only the non-US content of the value of the car will be subject to tariff. Components are tariff-free instead, for these countries. China, Germany, Japan and South Korea are the countries set to suffer the most out of the new policy. While automakers equities suffered, the overall GDP impact for tariffed countries is low. For Germany, autos represent 16% of exports and US sales are 2% of the total. If FX does not adjust, this policy will be mostly paid by US consumers via higher auto prices.
Liberation day ahead – Fasten your seatbelt
On Wednesday, President Trump is set to announce the remaining round of tariffs, which include other sectors and “reciprocal” tariffs. Some press suggested the announcements may end up being better than feared, with high single digit tariff rates announced. The focus will most likely be on the top twenty US trading partners. Markets will focus on the actual tariff rates, the room for negotiation, and the scope of countries included in the announcement. While equity markets remain volatile, we fear that the tariff announcement may end up worse than markets currently anticipate, with double-digit tariffs permanently imposed on some large partners.
Algebris Investments’ Global Credit Team
For more information about Algebris and its products, or to be added to our distribution lists, please contact Investor Relations at algebrisIR@algebris.com. Visit Algebris Insights for past commentaries.
Any opinion expressed is that of Algebris, is not a statement of fact, is subject to change and does not constitute investment advice.
No reliance may be placed for any purpose on the information and opinions contained in this document or their accuracy or completeness. No representation, warranty or undertaking, express or implied, is given as to the accuracy or completeness of the information or opinions contained in this document by any of Algebris Investments, its members, employees or affiliates and no liability is accepted by such persons for the accuracy or completeness of any such information or opinions.
© Algebris Investments. Algebris Investments is the trading name for the Algebris Group.
Auto tariffs – Game on
Last week, President Trump signed an executive order introducing tariffs on automobiles and automobile parts imported in the United States. The new policy introduces a 25% tariff on the value of imported cars and components, excluding USMCA countries. For this group, which includes Mexico and Canada, only the non-US content of the value of the car will be subject to tariff. Components are tariff-free instead, for these countries. China, Germany, Japan and South Korea are the countries set to suffer the most out of the new policy. While automakers equities suffered, the overall GDP impact for tariffed countries is low. For Germany, autos represent 16% of exports and US sales are 2% of the total. If FX does not adjust, this policy will be mostly paid by US consumers via higher auto prices.
Liberation day ahead – Fasten your seatbelt
On Wednesday, President Trump is set to announce the remaining round of tariffs, which include other sectors and “reciprocal” tariffs. Some press suggested the announcements may end up being better than feared, with high single digit tariff rates announced. The focus will most likely be on the top twenty US trading partners. Markets will focus on the actual tariff rates, the room for negotiation, and the scope of countries included in the announcement. While equity markets remain volatile, we fear that the tariff announcement may end up worse than markets currently anticipate, with double-digit tariffs permanently imposed on some large partners.
Algebris Investments’ Global Credit Team
For more information about Algebris and its products, or to be added to our distribution lists, please contact Investor Relations at algebrisIR@algebris.com. Visit Algebris Insights for past commentaries.
Any opinion expressed is that of Algebris, is not a statement of fact, is subject to change and does not constitute investment advice.
No reliance may be placed for any purpose on the information and opinions contained in this document or their accuracy or completeness. No representation, warranty or undertaking, express or implied, is given as to the accuracy or completeness of the information or opinions contained in this document by any of Algebris Investments, its members, employees or affiliates and no liability is accepted by such persons for the accuracy or completeness of any such information or opinions.
© Algebris Investments. Algebris Investments is the trading name for the Algebris Group.
