Bank of America Drops 3.13% Amid Tariff Fears
1min read On April 3, 2025, Bank of America's stock dropped 3.13% in pre-market trading.
Bank of America analyst John Murphy has warned that the Trump administration's proposed tariffs on the automotive industry could lead to a significant decrease in demand for cars, potentially resulting in plant closures. Murphy highlighted that price increases would likely reduce demand, especially given the already challenging affordability for many buyers. He estimated that if manufacturers pass on the full cost of the tariffs, demand could drop by approximately 20%, or 3.2 million vehicles. Murphy also noted that the government's hints at additional tariffs on more components could increase supply chain risks and lead to shutdowns. He added that due to labor costs and capabilities, it is "basically impossible" for most automotive parts to return to the U.S. However, automakers could mitigate some of the impact by moving part of their vehicle assembly to the U.S. and utilizing existing available capacity, with general motors and stellantis NV having the greatest opportunities.
Market uncertainty ahead of Trump's tariff announcement has led to a decline in U.S. stocks. Investors are anxious about the potential impact of the tariffs on the economy and corporate profits. Many Wall Street trading desks, including those at goldman sachs and bank of america, anticipate that the tariffs could further exacerbate the decline in U.S. benchmark stock indices. The market is on edge, awaiting clarity on the severity of the trade war and its potential impact on the economy and corporate earnings.
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