Jim Cramer Says Auto Tariffs Are Inevitable As Alibaba's Joe Tsai Says Chinese EVs May Eventually Be Hit By Them: 'More Than Half The Cars Sold Here Are Imports'

After President Donald Trump delayed the tariffs on automobile companies that comply with USMCA rules last week, the tariffs on carmakers were inevitable due to the high magnitude of imports, explained CNBC’s Jim Cramer in an X post.

What Happened: The Trump administration provided a one-month exemption to the automakers following the United States-Mexico-Canada Agreement, negotiated during his first term. These included automotive parts, accessories, and other supplier products along with completed vehicles.

As a one-month relief helped companies to chalk out their business plans, Cramer said that “Tariffs on cars are and have been expected,” as more than half the cars sold in the U.S. are imports and the tariffs on them are very small.

Trump has been talking about his protectionist policies much before assuming office. Cramer hinted that these tariffs were inevitable.

Apart from this, while speaking at a CNBC's event Converge Live, in Singapore, the chairperson of Alibaba Group Holding ADR (NYSE:BABA), Joseph Tsai also acknowledged that "Everyone is concerned about tariffs."

He noted that even if Trump's tariff strategy was merely a negotiation tactic, there was still a strong possibility of targeted tariffs on Chinese electric vehicles. Tsai further suggested that this could be an effort to protect the American auto industry from potential competition.

See Also: Alibaba’s Joseph Tsai Says ‘Everyone Is Concerned About Tariffs,’ As He Expects Levies On Chinese EVs

Why It Matters: While foreign carmakers Volkswagen and Stellantis NV (NYSE:STLA) were in compliance with USMCA rules and received the one-month extension, BMW did not meet the criteria for exemption.

The ‘Big 3’ Detroit automakers, which included General Motors Co. (NYSE:GM), Ford Motor Co. (NYSE:F) and Chrysler, which is now part of Stellantis, were also exempt from importing parts.

However, apart from the tariffs on automobiles and auto parts, on Wednesday, the Trump administration imposed sweeping tariffs on steel and auto imports, which will also affect the carmakers in the U.S. The European Union, impacted by these latest tariffs, responded within hours by imposing counter-duties on U.S. exports.

Glenn Stevens, who is the executive director at MICHauto, an automotive, mobility, and technology association, criticized Trump’s threat on Canada to shut down its auto industry. He said that the tariffs were “hampering and damaging the free trade bloc that currently operates as the USMCA.”

Price Action: The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, rose on Wednesday. According to Benzinga Pro data, the SPY rose 0.53% to $558.87, and the QQQ also advanced 1.13% to $476.92.

Meanwhile, on Wednesday, the three automotive industry exposed ETFs;

• First Trust Nasdaq Transportation ETF (NASDAQ:FTXR) dropped 0.24%.
• Global X Autonomous & Electric Vehicles ETF (NASDAQ:DRIV) rose 0.36%.
• iShares Self-Driving EV and Tech ETF (NYSE:IDRV) declined 0.064%.

Read Next:

• Ray Dalio Says China Is ‘Way Ahead’ In AI And Robotics: US Lags in Mass Production

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