GM Leads Automakers Higher as Trump Calls off Tariffs on Mexico

Investing.com - General Motors led automakers higher Monday as U.S. President Donald Trump called off tariffs on Mexican goods, easing fears that automakers would see their profit margins reverse on increased input costs.

Trump said his proposed 5% tariff on al Mexican imports, which were due to come into effect today, would not go ahead after the both nations reached an agreement on ways to curb the influx of migrants trying to make it across the southern border and into the United States.

Shares of automakers rallied, with General Motors (NYSE:GM) rising 1.54%, Ford Motor (NYSE:F) up 0.85% and Fiat Chrysler Automobiles (NYSE:FCAU) rising 1.70%.

The gains in autos helped pare some losses from a week earlier, when fears intensified that levies on Mexico would increase input costs and hurt margins as all cars, even those assembled in American plants, use parts imported from Mexico.

Macquarie last week warned that margins were so thin in the U.S. market that it was unlikely any automaker would not pass on these tariffs to their customers.

The Center For Automotive Research had predicted that if Trump had carried out his threat to gradually increase tariffs on Mexico 25%, the price of a new car assembled in the U.S. would rise by at least $1,100.

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