Photo credit AP

Good morning! Welcome to The Morning Shift, your roundup of the auto news you crave, all in one place every weekday morning. Here are the important stories you need to know.

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1st Gear: Markets

Much as many of you probably don’t want to hear about the election of Donald J. Trump as America’s 45th president—or you want to gloat, in which case, I hope your guy is up to the task of running a country—The Morning Shift is where we must discuss the financial impact of this outcome.

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First, the markets. There’s a ton of uncertainty and automaker stocks are down as questions of changes to trade policy arise. Via The Detroit News:

General Motors Co. stock was down more nearly 3.5 percent, while Ford Motor Co. also was down nearly 3.5 percent and Fiat Chrysler Automobiles NV was also down nearly 4 percent just after the market opened at 9:30 a.m.

Trump, during his campaign, was vocal and critical of the auto industry, particularly Ford Motor Co., for opening plants and moving production to Mexico. He has said he would re-negotiate the North American Free Trade Agreement. If that’s not a success for Trump, he has indicated he would end the trade pact with Canada and Mexico and slap a tariff as low as 10 percent, or as high as 35 percent, on vehicles and parts made in Mexico that are imported into the U.S.

Some analysts believe that could add substantial cost to vehicles. The timing also comes as new car sales are showing signs of slowing in the U.S. from their record clip. Automakers also face concerns that sales in China also may slow.

2nd Gear: Jobs

It was easy—too easy, in fact—for the left, the media and the pollsters to just completely write off Trump’s supporters merely as a “basket” of xenophobic, racist, misogynistic bigots. And Trump’s rhetoric absolutely tapped into those feelings among many people.

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But the factor that was largely ignored in much of the coverage of this election was economics, particularly how disenfranchised voters felt in places like Michigan and Pennsylvania and Ohio as American manufacturing has declined. That includes the automotive sector.

We saw the effects of that on Election Day. As the always-astute Ryan Beene writes over at Automotive News, whatever goodwill President Obama gained through the auto industry bailout and recovery did not translate to Hillary Clinton, and voters in Rust Belt states still felt like their jobs and futures were being shipped overseas. From his story:

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The success of Trump’s populist appeal serves as a clear sign that the industry’s soaring recovery hasn’t fully healed the deep wounds sustained by Rust Belt manufacturing communities that have seen jobs lost to globalization and automation.

Before a raucous crowd in Grand Rapids, Mich., in the early hours of Election Day, Trump invoked a vision of a U.S. manufacturing sector that had been hollowed out by unfair trade policies, which he vowed to overhaul.

“The trade policies of Hillary Clinton, from NAFTA to China to Korea to the Trans-Pacific Partnership, which by the way is a disaster, have raided your factories, crushed your auto industry and gutted your communities,” he said. “You know it.”

He reiterated his campaign pledge to renegotiate NAFTA, saying he’d “terminate” the pact if “we don’t get the deal we want” and negotiate a “much better deal for our workers and our companies.”

He also reiterated his campaign pledge to impose a 35 percent tax on products made in Mexico and shipped back to the U.S. by companies that move jobs to the country. It’s unclear what legal mechanisms Trump would use to impose such a tax.

Trump went hard after NAFTA during his campaign. His election is going to have a seismic impact on the automotive industry and trade as a whole.

3rd Gear: Mexico

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Specifically when it comes to trade with Mexico, which has been a consistent target for Trump. More on that via Reuters:

The election of Donald Trump as U.S. president puts new pressure on automakers and other manufacturers that have become dependent on open trade with Mexico, and raises the risk they will face higher costs.

Automakers could also take a hit if instability in financial markets undercuts the confidence of consumers in the United States and other major markets at a time when growth in U.S. auto sales has stalled.

Investors sold off U.S. stocks and the dollar in reaction to Trump’s unexpected win. Shares in Japanese automakers, which also rely on Mexico as a production hub for the U.S. market, slid as well, underperforming the benchmark Nikkei index, which fell 5 In afternoon Tokyo trade, shares in Toyota Motor Corp were down 6.5 pct, Nissan Motor Co Ltd was down 6.0 pct, while Honda Motor Co fell 7.8 pct. All three companies declined to comment.

4th Gear: Peaked

And in Japan, both Toyota and Nissan have declared that the U.S. is probably done being the golden profit-goose it’s been in the last couple years as record sales have already likely peaked. Via Bloomberg:

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Toyota Motor Corp. cut its forecast for North American sales this fiscal year by 60,000 vehicles and for the first time said it’s expecting a decline for the year, as American consumers shift away from fuel sippers like the Prius hybrid and toward trucks, crossovers and SUVs.

Nissan Motor Co., which posted a drop in profit as it gave heftier incentives that buoyed deliveries, said it’s not seeing room for further expansion.

“The market turned out to be somewhat weaker,” Takahiko Ijichi, a Toyota executive vice president, told reporters Tuesday after the carmaker reported a 43 percent plunge in quarterly operating profit. The North American market “really requires very careful managing going forward,” he said.

5th Gear: Dieselgate

Meanwhile in Dieselgate news—remember that?—politicians in Michigan are trying to figure out how to use the $2 billion Volkswagen was ordered to pump into electric vehicle research and infrastructure as part of the settlement. That clause has been criticized quite a bit though as EV demand sags with cheap gas. Via The Detroit News:

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Critics have accused regulators of forcing Volkswagen to pump funding into the U.S. electric car market at a time when sales figures show that drivers are turning to larger vehicles like SUVs.

They have also said the inclusion of funding for zero-emission vehicles in the deal could give Volkswagen a leg up in the electric-car market.

“VW may be able to obtain substantial competitive benefits, if not a monopoly on electric vehicle infrastructure, under the required investments,” U.S. House Energy and Commerce Committee Chairman Fred Upton, R-St. Joseph, said in a letter last week to the Environmental Protection Agency that was co-authored by Rep. Tim Murphy, R-Pa.

The EPA has said the zero-emission vehicle funding that is included in the Volkswagen deal is “intended to address the adverse environmental impacts.”

Reverse: One Of The ‘Whiz Kids’

Neutral: What Does A Trump Presidency Mean For The Auto Industry?

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I suppose it comes down to whether he’ll do what he said he would, but your guess is as good as mine.