Auto Stocks Plunge on Global Market Turmoil Amid Tariffs
Global automotive stocks experienced a significant decline on Monday as the market reacted to President Donald Trump's imposition of tariffs on Canada, China, and Mexico.
Japanese and European automakers witnessed a drop in share prices following the announcement. Toyota and Nissan both closed around 5% lower, while Honda stock witnessed a 7.2% decline. The move was prompted by tariffs of 25% on Canadian and Mexican goods and a 10% levy on Chinese imports.
The tariffs posed a substantial threat to the global automotive industry, with Japanese manufacturers facing particular vulnerability. Toyota, Nissan, and Mazda operate factories in Mexico, producing vehicles for the US market. Nomura estimates indicated that the new tariffs could cost automakers importing from these countries an additional $33 billion annually.
Other automotive stocks also faced losses. Tesla shed 5% during morning trading in New York, while General Motors declined by nearly 2% and Ford by 0.8%.
European carmakers such as Volkswagen, Stellantis, and BMW were equally affected by market turbulence. VW's drop reached 6.7%, marking an overall decline of over 22% in the past year. Stellantis, the owner of Jeep, Chrysler, and Ram, experienced a notable 7% loss. The company maintains a significant presence in Mexico, with approximately one-third of its full-size pickup truck production based there.
Analysts predicted that the tariffs would have a detrimental impact on the automotive industry globally and in the US. Jeffries analysts estimated a potential increase of $2,700 in average US vehicle prices due to the tariffs, with Ford, General Motors, and Stellantis being most heavily impacted owing to their substantial operations in Mexico.