Ford and GM Will Have to Pay Tariffs on Cars Made in Canada
New Canada tariffs are landing as a direct bill to two of America's biggest automakers, and the ripple effects stretch well beyond car lots into the housing market and household budgets.
FHN Financial chief economist Chris Lowe just spelled out the punchline of the new Canada tariff on Marketplace Morning Report: “Even though there are U.S. companies that manufacture in Canada, Ford and GM, particularly they will have to pay tariffs on the cars that are made there. And so that’s probably where the biggest impact is.”
The tariff aimed at Canada lands first as a bill to two American automakers and then to U.S. car and home buyers.
Trade War With Canada Will Impact Ford and GM Bottom Lines
Last week the U.S. pushed tariffs on $20 billion worth of Canadian goods to 50%, and Canada’s dollar-for-dollar retaliation is set to take effect September 8. Lowe added that lumber and cabinetry from Canada will push housing costs up, widening the consumer hit beyond autos.
The market already voted. Ford (NYSE:F | F Price Prediction) is up 4.8% year to date (YTD) but down 3.12% over the past month, while General Motors (NYSE:GM) is up nearly 7% YTD for the week but down 1.22% over the past month.
Ford lit up Reddit’s investing forum around the news, with the driving thread reaching 613 upvotes and 233 comments and sentiment stuck at a bearish 22. Ford’s own guidance already assumed roughly $2 billion of commodity headwinds; GM absorbed about $900 million of gross tariff impact in Q2 alone.
Profit angle: The Sept. 8 retaliation is the next catalyst. Watch for Ford and GM to revise the $10 billion to $11 billion and $14 to $16 billion EBIT ranges. Any cut, and the Detroit trade breaks lower. Any workaround, and the dip becomes the setup.
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Joel South covers large-cap stocks, dividend investing, and major market trends, with a focus on earnings analysis, valuation, and turning complex data into actionable insights for investors.
He brings more than 15 years of experience as an investor and financial journalist, including 12 years at The Motley Fool, where he served as an investment analyst, Bureau Chief, and later led the Fool.com investing news desk. He has also co-hosted an investing podcast and appeared across TV and radio discussing market trends.
