Auto tariffs – Game on
Last week, President Trump signed an executive order introducing tariffs on automobiles and automobile parts imported in the United States. The new policy introduces a 25% tariff on the value of imported cars and components, excluding USMCA countries. For this group, which includes Mexico and Canada, only the non-US content of the value of the car will be subject to tariff. Components are tariff-free instead, for these countries. China, Germany, Japan and South Korea are the countries set to suffer the most out of the new policy. While automakers equities suffered, the overall GDP impact for tariffed countries is low. For Germany, autos represent 16% of exports and US sales are 2% of the total. If FX does not adjust, this policy will be mostly paid by US consumers via higher auto prices.
Liberation day ahead – Fasten your seatbelt
On Wednesday, President Trump is set to announce the remaining round of tariffs, which include other sectors and “reciprocal” tariffs. Some press suggested the announcements may end up being better than feared, with high single digit tariff rates announced. The focus will most likely be on the top twenty US trading partners. Markets will focus on the actual tariff rates, the room for negotiation, and the scope of countries included in the announcement. While equity markets remain volatile, we fear that the tariff announcement may end up worse than markets currently anticipate, with double-digit tariffs permanently imposed on some large partners.
Algebris Investments’ Global Credit Team
For more information about Algebris and its products, or to be added to our distribution lists, please contact Investor Relations at algebrisIR@algebris.com. Visit Algebris Insights for past commentaries.
This document is issued by Algebris Investments. The information contained herein may not be reproduced, distributed or published by any recipient for any purpose without the prior written consent of Algebris Investments.
The information and opinions contained in this document are for background purposes only, do not purport to be full or complete and do not constitute investment advice. This document does not constitute or form part of any offer to issue or sell, or any solicitation of an offer to subscribe or purchase, any investment nor shall it or the fact of its distribution form the basis of, or be relied on in connection with, any contract therefore.
No reliance may be placed for any purpose on the information and opinions contained in this document or their accuracy or completeness. No representation, warranty or undertaking, express or implied, is given as to the accuracy or completeness of the information or opinions contained in this document by any of Algebris Investments, its members, employees or affiliates and no liability is accepted by such persons for the accuracy or completeness of any such information or opinions.
The distribution of this document may be restricted in certain jurisdictions. The above information is for general guidance only, and it is the responsibility of any person or persons in possession of this document to inform themselves of, and to observe, all applicable laws and regulations of any relevant jurisdiction. This document is suitable for professional investors only. Algebris Group comprises Algebris (UK) Limited, Algebris Investments (Ireland) Limited, Algebris Investments (US) Inc. Algebris Investments (Asia) Limited, Algebris Investments K.K. and other non-regulated companies such as special purposes vehicles, general partner entities and holding companies.
© Algebris Investments. Algebris Investments is the trading name for the Algebris Group.
This document is issued by Algebris (UK) Limited. The information contained herein may not be reproduced, distributed or published by any recipient for any purpose without the prior written consent of Algebris (UK) Limited.
Algebris (UK) Limited is authorised and Regulated in the UK by the Financial Conduct Authority. The information and opinions contained in this document are for background purposes only, do not purport to be full or complete and do not constitute investment advice. Under no circumstances should any part of this document be construed as an offering or solicitation of any offer of any fund managed by Algebris (UK) Limited. Any investment in the products referred to in this document should only be made on the basis of the relevant prospectus. This information does not constitute Investment Research, nor a Research Recommendation. Algebris (UK) Limited is not hereby arranging or agreeing to arrange any transaction in any investment whatsoever or otherwise undertaking any activity requiring authorisation under the Financial Services and Markets Act 2000.
No reliance may be placed for any purpose on the information and opinions contained in this document or their accuracy or completeness. No representation, warranty or undertaking, express or implied, is given as to the accuracy or completeness of the information or opinions contained in this document by any of Algebris (UK) Limited , its members, employees or affiliates and no liability is accepted by such persons for the accuracy or completeness of any such information or opinions.
The distribution of this document may be restricted in certain jurisdictions. The above information is for general guidance only, and it is the responsibility of any person or persons in possession of this document to inform themselves of, and to observe, all applicable laws and regulations of any relevant jurisdiction. This document is for private circulation to professional investors only.
© 2025 Algebris (UK) Limited. All Rights Reserved. 4th Floor, 1 St James’s Market, SW1Y 4AH.
