Shares of Paccar, the parent company of the Peterbilt and Kenworth brands, experienced a significant increase after President Donald Trump announced a new 25% tariff on imported heavy trucks. The tariff will begin at 10 percent on October 1. It is designed to shield US truck makers from foreign truck makers and it will further entrench Paccar’s already strong market position.
Paccar produces over 90% of its trucks in the US. This robust domestic production places the company in a strong position under the new tariff. Paccar’s U.S. trucks are about $8,000 to $10,000 more expensive than those produced by their rivals in Mexico. One recent policy development could significantly enhance Paccar’s competitive advantage. Indeed, industry analysts have pointed out that this tariff will cause a spike in demand for Paccar’s vehicles.
Additionally, Bank of America (BofA) has told clients that Paccar is poised to come out winners from Trump’s announcement. In a note to investors, equity analyst Michael Feniger praised the company’s fortuitous position. He declared that Paccar is now “in the driver seat” following the new tariff’s implementation. This sentiment is indicative of a general bullishness in the market on Paccar’s future performance.
No wonder, then, that during his announcement President Trump bragged about how high and protective the tariff is. He claimed that it will protect maker of these large trucks.
“Large Truck Company Manufacturers, such as Peterbilt, Kenworth, Freightliner, Mack Trucks, and others, will be protected from the onslaught of outside interruptions.” – Donald Trump
While the announcement has raised eyebrows across an entire industry, especially as seen by how Paccar has returned to its roots of technological innovation. One high-profile example is the all-electric, zero-emissions Peterbilt 579 truck. It’s equipped with Aurora’s self-driving technology and was photographed at a terminal in Palmer, Texas on September 23, 2021. This latest development further highlights Paccar’s drive to push its product portfolio forward as the industry continues to change quickly around the global truck maker.