A 25% tariff has severely impacted US auto stocks, putting pressure on the supply chain of the USMCA.
1min read U.S. financial markets were thrown into turmoil Monday as auto stocks, suppliers, and ancillary industries closed weakly on President Trump's promise to impose 25% tariffs on imports from Canada and Mexico.Trump, speaking at a news conference, said, "Tomorrow will be 25% tariffs on Canada and Mexico," adding that there was "no room" for a deal before the midnight deadline.The long-standing tariff policy, which will be the most sweeping of the Trump administration, will affect about $1.5 trillion in U.S. imports annually. All goods from Canada and Mexico will be subject to a 25% tariff, with the exception of Canadian energy products, which will be taxed at 10%. Trump also announced that tariffs on Chinese imports will be doubled to 20%.His comments sent shockwaves through a market already sensitive to tariffs, causing the Dow Jones to fall 650 points and sending shares of the Detroit Three — general motors, ford, and stellantis — and tesla tumbling at the close.The impact was not just on automakers. Suppliers aptiv, Lear Corp, Borgwarner, Magna International, and Autoliv also faced significant selling pressure. Dana Incorporated, which makes transmissions, driveshafts, and driveline systems for Ford and Stellantis vehicles and parts for the mining and construction industries, fell about 5% to a six-week low.Adient plc, which makes seats and interior parts, fell nearly 7%, while Goodyear Tire & Rubber Co., the largest tire maker in Canada, headquartered in Ohio, fell 6.5%.The knee-jerk reaction to Trump's comments underscores Wall Street's sensitivity to tariff shocks. While most U.S. cars are made domestically, 16% are made in Mexico and slightly more than 7% in Canada. However, a 25% tariff on imports from those countries (and parts from outside the U.S.) would add an average $6,250 to the cost of a car, a cost that is likely to be shared by manufacturers and consumers.Both Mexico and Canada have vowed to retaliate against U.S. tariffs.
