Trump Tariffs Could Put Ford, GM At 'High Risk' Of Negative Ratings: Report

Ford Motor Co. F and General Motors Co. GM are at high risk for receiving negative ratings from ratings agency S&P amid the uncertainty surrounding the Trump administration's auto tariffs.

What Happened: The ratings agency released a report on Monday, first noted on Bloomberg, citing the 25% auto tariffs on car manufacturers by the Trump administration as the reason for the risk. Interestingly, cars assembled in Mexico and Canada subject to more intricate and complex tariffs based on where the parts were imported from.

The automotive industry involves a complex, multi-national supply chain, with car manufacturers importing parts from various countries across the globe. Ford is currently rated BBB- while GM boasts a BBB rating, according to the agency.

Analysts pointed out that the forecasts carry a ‘significant amount of uncertainty' given the Trump administration's volatility with the tariffs. The report also mentioned a 2% decline in the cumulative U.S. auto sales as well as a price increase of about 5-10% for consumers.

Why It Matters: The report comes at a time when Trump and the government have been on the receiving end of criticism from stakeholders in the auto industry due to the tariffs.

A recently released report suggests that the tariffs could cost the auto industry over $108 billion, highlighting the magnitude of the administration's decision amid a temporary 90-day halt on most tariffs.

However, the president indicated that he wanted to support and help car companies navigate the trade changes. Trump's comments were well-received by the market as U.S. auto stocks experienced a surge in value following his statement to the media.

Price Action: GM is currently trading at $45.14 on the NYSE, according to Benzinga Pro data.

Photo Courtesy: Mike Mareen On Shutterstock.com

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