Fiat Chrysler Denies Trump Agenda Connection
It seems that at least in the case of Fiat Chrysler, the company made the decision to expand its US manufacturing footprint before Trump won the election. If this is indeed true, it seems that President Elect Trump has figured out how to use these decisions to build upon the tenuous support he got in the battle ground, rust belt states.
Part of a Pattern
This shouldn’t be a surprise to anyone. A few days ago, Trump similarly praised Ford for Opening a $1 Billion USD plant in the US instead than in Mexico. There is no way of knowing if the President Elect’s tough talk on tariffs for US companies producing abroad, had any effect on that decision. Nevertheless, 140 characters flew into the public arena from the very same account that is giving investors the jitters.
The Auto Industry is an easy Target
These tweets seem to affect auto maker stocks more than those of other companies. That is because it is an easy target. The industry in the US is almost completely based on the rust belt states, in which narrow victories catapulted Trump to the White House. It is also easy to spot where a car is produced, how the parts move around the globe and where the cars are coming from. That means enforcing tariffs, quotas and local content policies is quite easy.
Investing in the Auto Industry in the Trump era
This means that Trump will continue to play the game he is playing with the auto industry. Investing in this sector during the Trump era will have more to do with the 140 characters that the President Elect will choose to tweet than more logical industry indicators. This time Fiat Chrysler was on the President Elect’s good side; next time it can find itself on the receiving end of a scathing tweet, just like GM was 7 days ago. Its stock will react accordingly.
