Morningstar

What Potential New U.S. Auto Tariffs Mean for Industry

Toyota and GM's Buick brand have concerning exposure, but it's too early to say that we'll change their fair value estimates as a result.

Securities In This Article
Toyota Motor Corp ADR
(TM)
General Motors Co
(GM)

On May 23, The Wall Street Journal reported the U.S. Commerce Department is considering starting an investigation, which could last over 10 months, that might lead to tariffs of up to 25% on imported vehicles in the United States. We don't see these tariffs lasting forever and we think these tariffs will ultimately cost American jobs. Just as the White House did with steel and aluminum tariffs announced in March, it would invoke Section 232 of the Trade Expansion Act of 1962 citing national security. We disagree but measures like this are ultimately about protecting American manufacturing jobs in states that voted for Trump rather than national security. We don't have detail yet as to if auto parts are also impacted and what countries are impacted, but we assume it would be for countries outside of North America due to NAFTA exempting Canadian and Mexican auto imports into the U.S.

If that assumption holds, we see

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About the Author

David Whiston, CFA, CPA, CFE

Strategist
More from Author

David Whiston, CFA, CPA, CFE, is a strategist, AM Industrials, for Morningstar*. He covers stocks in the automotive industry, including dealerships, parts manufacturers, and automakers. He has covered the automotive industry since joining Morningstar in 2007. He writes stock reports, ad hoc reports, stock analyst notes, and builds discounted cash flow models for each company covered. He also assesses their economic moat and makes frequent television and print media appearances in local, national, and international news outlets. Key stocks covered include GM, Ford, CarMax, and all six publicly traded franchise auto dealers, such as AutoNation and Penske Automotive Group.

Before joining Morningstar in 2007, Whiston spent four years in PricewaterhouseCoopers’ New York real estate audit practice and one year in its Chicago office working on real estate acquisition due diligence, gaining experience around assessing an asset’s cash flow.

Whiston holds a bachelor’s degree in business administration with a concentration in accounting from the University of Richmond’s Robins School of Business. He also holds a master’s degree in business administration with concentrations in finance, economics, and organizational behavior from the University of Chicago Booth School of Business. He holds the Chartered Financial Analyst® designation, and he is a Certified Public Accountant and a Certified Fraud Examiner.

In 2012, he ranked first in the specialty retailers and services industry in The Wall Street Journal’s annual “Best on the Street” analysts survey. He ranked first in the same industry in 2011 .

* Morningstar Research Services LLC (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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