Trump's Tariff Threat Slams Auto ETFs
The recent announcement by President Donald Trump to increase tariffs on Canadian cars and automotive parts from 25% to 50% has sent shockwaves through the market, affecting automaker stocks such as Ford Motor Co, Stellantis, and General Motors Company.
Ford and Stellantis fell around 4%, while General Motors declined by about 2%. This move is a direct equity-market exposure, but ETFs offer a broader way to play potential disruption in the auto industry.
The Global X Autonomous & Electric Vehicles ETF (DRIV) offers a diversified exposure with holdings including Microsoft Corp at 3.65%, Nvidia Corp at 3.02%, Alphabet, Inc at 2.79%, and Tesla, Inc at 2.75%. Although General Motors accounts for only 1.81% of the portfolio, its presence and initial fund price reaction show that it's not completely insulated from a North American auto supply-chain shock.
The First Trust S-Network Future Vehicles & Technology ETF (CARZ) takes a similarly broad approach with holdings across the vehicle and technology ecosystem. Its largest positions include Microsoft at 5.81%, Nvidia at 4.97%, Samsung Electronics at 4.84%, Apple, Inc at 4.57%, Micron Technology Inc at 4.56%, and Tesla represented 3.94%.
The real question for ETF investors is what happens if the 50% tariff actually takes effect. A prolonged tariff regime could force automakers to absorb higher costs, raise vehicle prices, or accelerate production and sourcing shifts into the U.S. This could create winners among domestic manufacturers, steel producers, and industrial companies even as automakers face margin pressure.