NEWSLETTER
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Yesterday (March 26), President Trump announced that he would impose 25% tariffs from next week in all foreign manufacturing cars. Not only finished products, but also apply to some parts and car components. As a result, I am not surprised that values of values around the world work lower today. Here are the possible implications.
Taking the blow for exports
The immediate concern that comes to mind is related to the impact on the manufacture of cars from the United Kingdom. For example, consider Aston Martin (LSE: AML). The luxury car manufacturer exports to the US, so a 25% tariff would make cars significantly more expensive in that market, which potentially reduces sales volumes.
Unlike mass market brands, Aston Martin operates in the luxury niche. The 2024 results showed wholesale volumes of 6,030 cars, which is small compared to more conventional companies. As a result, having less cars sold could have a disproportionate impact on income, given the size of the market.
To compensate for the rate, Aston Martin's management could decide to absorb the cost. Although this would act to maintain normal demand, it would reduce gain margins. Last year he recorded a gross margin of 36.9%, so a 25% coup in this would not clearly be great.
Finally, the business does not have assembly plants in the United States. Therefore, it is not as if it can increase production in the country, avoiding tariffs that way. The action has already dropped 57% during the last year, and I do not think that these last news helps him to advance.
However, the United States is just a market. With a new vehicle alignment, formula 1 and a higher average sale price (ASP) promoted, the business could change the focus on other geographical regions to compensate for the tariff impact. In this case, things may not be so bad.
Other market impacts
Apart from Aston Martin, there are other impacts on the stock market in general. For example, there are many companies involved in some way in the automotive supply chain. This includes suppliers of logistics parts and companies, which means that they can experience operational challenges due to higher costs and commercial barriers.
Continuous tariff uncertainty is not excellent for the feeling of investors. The broader market can witness increased volatility as investors react to growing commercial tensions and their potential impact on the United Kingdom economy. As an example, there could be job losses in the United Kingdom with car manufacturing plants in the United Kingdom, such as Nissan's operations in Sunderland. This could further sour feeling, which makes investors move to defensive actions or choose to sit in cash.
The other face is that we don't really know if this tarfiff decision will be applied. This year we have seen delays in rates, and some have completely fallen. It is a moving image, so investors should not panic and make hasty investment decisions. Maintaining a long -term market vision should help reduce noise in the coming weeks.
(Tagstotranslate) category. Investing
