4 Auto Stocks Set To Benefit From Trump's Tariffs

President Donald Trump's decision to slap tariffs on Canada, Mexico and China includes levies on auto imports from all three countries. Additionally, 25% tariffs on steel and aluminum were tacked on and triggered on March 12.

S&P Global said the most likely scenario is an "extended disruption period lasting 16 to 20 weeks," with "several high exposure vehicles" either slowing or ceasing production.

That's bad news for many car makers, who ship steel, parts and even whole vehicles across North America before they're sold. 

But look deeper and some sectors of the auto industry may actually prosper from these tariffs.

Here are four car companies set to benefit from the tariff tit-for-tat. 

Market experts say disruption is the rule going forward across the globe – and with American and European automakers looking better going forward.

"Trump’s tariffs on steel, aluminum, and Chinese imports are placing production expense on American automakers, constricting margins for foreign-part-dependent companies," said Fei Chen, founder and CEO at Intellectia.AI, a financial intelligence company.

"Diversified Japanese and European automakers are less impacted. Chinese automakers, especially BYD and Geely, could benefit most as China doubles down on domestic EV manufacturing and export efforts, focusing on tariff-friendly markets in Asia, the Middle East, and Latin America," Chen said.

High tariff activity is causing automaker CEOs to alter their strategic planning, which casts additional clouds on auto stocks.

"Right now, the administration's tariffs are forcing automakers to examine their supply base to see what the easiest shifts may be to ease some of the burden on what components are produced where," said Brian Sponheimer, portfolio manager at Gabelli Funds. "For production of full product lines to be moved from Mexico or Canada to the US, the cost would be measured in billions, so automakers must choose whether that cost makes sense on a long-term basis given the potential for a tariff increase that may not be measured in multiple years."

Auto Stocks To Test Drive In 2025

In such a chaotic sector environment, which auto stocks stand out during the tariff wars? Here's what industry experts have to say.

Tesla (NASDAQ:TSLA) – Tesla hasn't gotten off to a great start, but tariffs may give the stock a much-needed tune-up. "Love it or hate it, they’re the EV champs," said Alex Black, chief marketing officer at EpicVIN. "Tariff-free importation of strategic battery components plus brand loyalty will sustain them."

Toyota (NYSE:TM) This Japanese automaker should continue to thrive mainly due to its diverse supply base and strong hybrid offerings, making Toyota "tariff and rising production cost-resistant," Chen said.

BYD (OTC:BYDDY) The Chinese giant EV maker, with strong demand, is growing in Europe and Latin America. "They’re vertically integrated, so they have cost control superior to most," Black said.

Chen agreed. "As the automaker expanding beyond U.S. borders, it's escaping tariffs as it capitalizes on global EV demand."

General Motors (NYSE: GM), a home grown legend, GM has based its domestic production in Detroit MI, and "now it's in prime position to be at the forefront of production locally and to combat the challenges that most other car manufacturers will face among these new regulations," said Lucas Barcelo, founder at Thrivin Life, an automation and analytics marketing company.

"GM has a good diversified supply chain, their domestic production will allow them to mitigate tariff impact, they have remained relatively financially strong over the years, and now we'll get to see how they adapt and innovate among big changes – this is their chance to shine," Barcelo added.

Used car specialists: Tariffs raise costs, making consumers less likely to purchase a new vehicle.

"This makes stocks that generate profits from the used vehicle market and through service and parts more likely to benefit on a relative basis," Sponheimer said. "We have long appreciated the dealer model that AutoNation (NYSE:AN) and Penske (NYSE:PAG) employ, driving over half of gross profits from parts and service."

Additionally, CarMax (NYSE:KMX) will likely experience an inflection in the addressable market for late-model used vehicles starting in 2H, Sponheimer added. "With more consumers looking to purchase used vehicles, the company should benefit from volatility in the new market."

Takeaway On Tariffs And Auto Stocks

When kicking tires on auto stocks, extend that research into auto aftermarket companies, which tend to get overlooked by investors.

"The US new vehicle market is in the range of 15-17 million units in a typical year, and the used market is 40 million in annual sales, and the total vehicle population in the United States is over 290 million vehicles," Sponheimer said.

He likes companies that service the larger, less cyclical total vehicle population, where the average vehicle age is nearing 13 years old.

"These vehicles require service, particularly as complexity has skyrocketed," Sponheimer noted. "So this automotive aftermarket produces outstanding business models with outstanding cash flow characteristics."

Additionally, the aftermarket tends to be an area where inflationary pressure can be passed along. "This is typically a fertile fishing ground for auto stocks," he added.

Finally, The Investing Edge You've Been Searching For

Today, you can get immediate access to lightning-fast market alerts & insights delivered daily for less than $11 a month. Click HERE to start investing with an edge today.

Photo: Shutterstock