- Dow Jones Industrial Average plunges 250 points post-announcement
- GM and Ford shares drop 8.2% and 2.9% respectively
- Canada vows retaliation, calls tariffs 'economic sabotage'
The US stock market opened sharply lower Thursday as investors reacted to sweeping 25% tariffs on imported vehicles and components. Analysts warn the policy could add $4,800 to average car prices while disrupting North American supply chains that span 11,000 factories. Michigan-based auto suppliers reported emergency meetings with Canadian partners to assess production cuts.
General Motors shares nosedived 8.2% in early trading, their steepest single-day decline since 2022's semiconductor shortage crisis. Ford Motor Company slid 2.9%, with Stellantis—parent company of Jeep and Ram Trucks—losing 4.1% of its market value. Tesla emerged as the lone gainer, rising 1.5% as investors bet on reduced foreign EV competition.
Industry experts highlight three critical implications: First, Midwest manufacturing hubs face immediate layoff risks. Second, Mexican parts imports—which constitute 38% of US auto components—could trigger $12 billion in retaliatory duties. Third, consumer inflation may accelerate beyond current 4.2% annual projections.
The tariffs specifically target light trucks and SUVs, which account for 78% of US vehicle sales. A regional case study shows Alabama's Mercedes-Benz plant could face $600 million in annual surcharges for German-sourced transmissions. Meanwhile, Canadian Prime Minister Mark Carney confirmed plans to impose mirror tariffs on Kentucky-made Ford pickups.
Automotive innovation faces new hurdles as the tariffs apply to advanced driver-assistance systems (ADAS). Suppliers like Bosch and Magna International saw shares tumble 5-7% on fears R&D budgets will shrink. Paradoxically, Tesla's vertically integrated production model gives it rare pricing stability in the chaos.
Market analysts revised 2025 GDP growth projections downward by 0.4%, anticipating reduced consumer spending power. The White House maintains tariffs will create 35,000 manufacturing jobs, though economists counter that automation trends limit potential gains. As trading closed, volatility indexes hit 11-month highs, signaling prolonged market uncertainty.