What Happened?
Shares of automotive manufacturer Ford (NYSE: F) fell 5.3% in the pre-market session after President Trump announced 25% tariffs on all cars imported into the United States. Stocks of automakers that don't source materials and make all vehicles in the United States appeared to have been hit the hardest. The prospect of higher tariffs raises concerns about reduced profit margins, disrupted operations, and a potential slowdown in future growth. For these automakers, the new policy also introduces fresh uncertainty around competitiveness in the U.S. market, which could ultimately weigh on earnings.
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What The Market Is Telling Us
Ford’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 22 days ago, when the stock gained 5.3% on the news that the Trump administration announced a one-month delay for tariffs on automakers whose cars comply with the United States-Mexico-Canada Agreement. This was positive news, particularly for affected automakers who found their business entangled in the trade war. Markets had projected potential disruptions to the supply networks of auto manufacturers as the tariffs meant an increase in the cost of raw materials, parts, and finished goods.
Ford is up 2.7% since the beginning of the year, but at $9.91 per share, it is still trading 31.9% below its 52-week high of $14.55 from July 2024. Investors who bought $1,000 worth of Ford’s shares 5 years ago would now be looking at an investment worth $1,909.
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