Trump's auto tariffs could be boon for rental car companies
President Donald Trump’s recently announced auto tariffs could potentially be a boon for rental car companies.
Hertz on Thursday saw its stock price post a jump of over 20%, and another rental car company, Avis, posted a double-digit increase the same day.
The jumps that those rental car companies experienced Thursday came the day after the president revealed he was imposing a new 25% auto import tariff in early April.
PRESIDENT DONALD TRUMP ANNOUNCES NEW AUTO TARIFFS
"You might see some drivers opt to go the rental car route rather than buying a new, expensive vehicle," FOX Business correspondent Madison Alworth reported. "The other reason, which is very compelling, is that companies like Hertz and Avis, once they’re done using their cars as rental cars, they then sell them on the used car market."
The new tariff applies to passenger vehicles, light trucks and some auto parts shipped into the U.S. from other countries.
The White House said importers of vehicles under the United States-Mexico-Canada Agreement "will be given the opportunity to certify their U.S. content and systems will be implemented such that the 25% tariff will only apply to the value of their non-U.S. content."
TRUMP'S 25% AUTO IMPORT TARIFFS: THESE ARE THE MOST IMPACTED MANUFACTURERS
The tariff would not apply to rental cars sold on the used car market by rental companies like Hertz and Avis, according to Alworth.
"So, they’re more valuable today than they were before this tariff announcement," she said.
In addition to rental car companies, U.S. auto parts companies stand to see more opportunity for repairs and parts if drivers decide to keep their existing cars for a longer period of time, Alworth reported, citing J.P. Morgan analysts.
"When your car is in the shop, what do you do in the meantime? You head to a rental company like Hertz," she added. "That’s also helping those stocks."
The new auto tariffs are expected to become effective April 2.
TRUMP KEEPS HIS WORD, DELIVERS BIG WIN FOR AUTOWORKERS, UNION LEADER SAYS
Matt Blunt, the president of the American Automotive Policy Council, said in a statement Wednesday it was "critical" the tariffs "are implemented in a way that avoids raising prices for consumers and that preserves the competitiveness of the integrated North American automotive sector that has been a key success of the president’s USMCA agreement."
Trump has argued auto tariffs will push auto companies to build more factories and hire more workers in the U.S.