Trump Cuts Auto Tariffs: What Does It Mean for FTXR, MADE?
- President Trump is set to soften the blow of auto tariffs with stacking exemptions.
- Manufacturing ETFs have diverged in performance amid trade uncertainty.
- GM is reconsidering its outlook while auto policy groups praise changes.
The White House confirmed Tuesday that President Donald Trump will sign an executive order to soften the impact of automotive tariffs, preventing duties on foreign-made cars from stacking on top of other levies and providing reimbursement options for auto-parts tariffs.
This decision comes as automakers and the broader transportation sector grapple with regulatory uncertainty and rising costs, with the White House press secretary announcing Trump would sign the executive order later Tuesday, according to CNBC reporting.
The auto industry has lobbied intensely for relief, with six major policy groups representing manufacturers, suppliers and dealers joining forces last week to warn the administration that the 25% tariffs on imported parts could jeopardize U.S. automotive production and harm suppliers already "in distress," as reported by CNBC.
FTXR vs. MADE Performance
The impact of these tariffs is reflected in the performance of ETFs holding major automakers like Ford Motor Co. (F) and General Motors Co. (GM). The First Trust Nasdaq Transportation ETF (FTXR), which has large holdings in both companies, has seen its performance decline in recent months.
FTXR, which tracks an index of 30 U.S. transportation companies including auto manufacturers and electric-vehicle makers, holds Ford (9.6%), General Motors (8.8%) and Tesla Inc. (TSLA) (8.9%) among its top holdings, based on etf.com data. The fund has experienced challenges, declining 19.4% over the past three months and 16.7% year to date.
The transportation-focused ETF has also experienced outflows, with investors withdrawing $1.3 million over the past month and $1.1 million year to date.
In contrast, the iShares U.S. Manufacturing ETF (MADE), which also holds positions in Ford (3.3%) and General Motors (3.9%), has shown more resilience with smaller declines of 8.4% over three months and around 7% year to date. MADE has attracted new investment, with inflows of $2.5 million over the past month and $4.8 million year to date, etf.com data show.
Policy Changes Impact Auto Sector
These contrasting ETF performances highlight how investors are responding differently to the auto industry's challenges amid the evolving trade policies.
The Wall Street Journal reports that under the new measures, automakers paying Trump's 25% automotive tariffs won't be charged for other duties, such as those on steel and aluminum. The administration will also modify its approach to the upcoming 25% tariffs on foreign auto parts scheduled to take effect May 3.
Meanwhile, General Motors acknowledged the uncertain trade environment on Tuesday, with shares down 1% after the company reported first-quarter earnings and said it was reconsidering its full-year outlook due to concerns over tariffs and macroeconomic uncertainty, according to CNBC.
