Macro

Ford, GM, First Solar Poised to Gain Amid New US-China Tariffs

Morgan Stanley predicts Ford, GM, and First Solar to benefit from new US-China tariffs, potentially boosting domestic demand.

By Bill Bullington

5/15, 07:40 EDT
S&P 500
iShares 20+ Year Treasury Bond ETF
iShares 7-10 Year Treasury Bond ETF
Ford Motor Company
First Solar, Inc.
General Motors Company
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Key Takeaway

  • Morgan Stanley identifies Ford, General Motors, and First Solar as beneficiaries of new U.S.-China tariffs.
  • First Solar's stock up nearly 9% in 2024; seen as a significant beneficiary amid trade policy shifts favoring domestic products.
  • GM stock climbs over 25%, and Ford up 2% in 2024; both may gain from higher demand for gas-powered cars as EV sales lag.

Tariffs Impact on US-China Trade

The Biden administration's recent imposition of tariffs on $18 billion worth of imports from China marks a significant shift in US-China trade relations. These tariffs, covering a wide range of goods including electric vehicles, solar cells, and specific steel and aluminum products, aim to address trade practices that the US claims are detrimental to global supply chains. Morgan Stanley analysts, led by strategist Laura Sanchez, suggest that while these tariffs might pose near-term growth headwinds, they could ultimately accelerate demand for domestically produced goods over Chinese imports.

Beneficiaries of the New Trade Policy

US automakers Ford and General Motors, along with solar panel manufacturer First Solar, are positioned to benefit from the new tariffs. First Solar, in particular, is highlighted as a significant beneficiary due to the protection of US supply chains and incentives for developers to purchase domestic products. This comes in the wake of a new anti-dumping and countervailing duties petition filed by domestic solar manufacturers against imports from several Asian countries. Morgan Stanley maintains an overweight rating on First Solar, anticipating an acceleration in bookings momentum and improved pricing should the petition be accepted.

Auto Industry Shifts Amid EV Challenges

The tariffs are expected to influence the interpretation of provisions in the Inflation Reduction Act, potentially benefiting electric vehicle (EV) sales for Ford and General Motors. However, the analysts note that incentivizing locally manufactured EVs might slow down EV penetration, thereby extending demand for traditional internal combustion engine vehicles. This scenario is seen as beneficial for Ford and General Motors, which have seen their stock prices increase in 2024, with GM stock climbing more than 25%.

Street Views

  • Laura Sanchez, Morgan Stanley (Bullish on First Solar, Ford, and General Motors):

    "New tariffs on clean tech imports could have a detrimental impact on near-term growth, and thus climate benefits, but should serve as a demand accelerant for domestic-made products." "First Solar remains 'a significant beneficiary of any trade policies that protect U.S. supply chains and provide developers with further incentive to buy domestic.'" "As a result [of the Anti-Dumping and Countervailing Duties petition], we would expect bookings momentum to accelerate and pricing to improve." "[Both General Motors and Ford will benefit from changes the new tariffs will bring]... incentivizing locally manufactured EVs could come at a cost from a penetration standpoint."