Auto stocks plunge as Trump tariffs spark trade war concerns

Key Points

  • Shares of auto giants fell sharply after U.S. President Donald Trump imposed tariffs on goods from Canada, Mexico, and China.
  • Canada and Mexico threatened retaliatory measures, including tariffs, in response to the U.S. tariffs.
  • Global automakers' shares plunged due to concerns over a potential trade war.
  • Analysts expect Trump’s tariffs to significantly impact the global automotive industry due to its reliance on North American manufacturing and complex supply chains.
  • The European Union might be next to face U.S. tariffs, potentially affecting the European automotive industry's success.

Summary

On April 1, 2024, shares of major auto companies plummeted following U.S. President Donald Trump's decision to impose tariffs on goods from Canada, Mexico, and China. The tariffs, which include a 25% duty on Mexican and most Canadian goods and a 10% duty on Canadian energy products and Chinese goods, are set to take effect from Tuesday. Trump justified these measures citing threats from illegal immigration and drug issues. In response, Canada and Mexico have threatened retaliatory tariffs. The global automotive industry, heavily reliant on North American manufacturing, faces significant disruption, with shares of companies like General Motors, Ford, Toyota, and Volkswagen dropping sharply. Analysts predict a profound impact on the industry due to its complex supply chains. There's also speculation that the European Union might be next in line for U.S. tariffs, which could raise the cost of European cars in the U.S. market and reduce EU auto exports. German automakers like Volkswagen, Mercedes-Benz, and BMW, already facing economic challenges, are particularly concerned about these potential tariffs.

cnbc
February 3, 2025
Stocks
Read article

Related news