Auto stocks broadly declined in stock market trade Thursday after President Donald Trump announced 25% tariffs on "all cars not made in the United States," as he shakes up the global auto trade in an attempt to incentivize more auto production in the U.S.
The White House announced the move late Wednesday, saying the tariffs, effective April 2, will be added to any duties already in place. The new Trump tariffs cover autos and some parts and components, including engines, transmissions and power trains. Autos assembled in Canada and Mexico will only face tariffs on non-U.S. parts.
"Our automobile business will flourish like it's never flourished before," Trump said Wednesday.
However, the tariffs could cause industry disruptions and spur significantly higher auto prices for U.S. car buyers. Wedbush Securities analyst Dan Ives wrote late Wednesday the "big confusion for investors" will be around "finished cars and/or auto parts."
Ives said that General Motors and Ford "in particular get many parts and do some production outside the U.S. (Mexico) therefore these names will be under some pressure" until gets more clarity on the tariff impact.
"We continue to believe this will be ultimately finished cars which is less onerous for GM and Ford. Tesla would be less exposed to tariffs as their production and assembly is all in the U.S.," Ives wrote.
However, the analyst added if the initial tariffs hold in their current form it is a "hurricanelike headwind to foreign (and many U.S.) automakers." Ives believes the tariffs will push the average price of a vehicle up between $5,000-$10,000.
Tariffs Weigh On Auto Stocks
Auto stocks General Motors, Ford and Chrysler-parent Stellantis fell 7.4%, 3.8% and 1.2% respectively during Thursday's stock market action. U.S. EV manufacturer Tesla edged up 0.4% while Rivian surged 7.6%.
Meanwhile, German auto titan Volkswagen 1/10th American Depositary Receipts (ADR) traded up 0.3% on Thursday. Ferrari advanced 3.2% on Thursday.
Japan-based Toyota ADR and Honda Motor ADR fell 2.9% and 2.7%, respectively in early stock market trade on Thursday.
The Frankfurt exchange's DAX index was off 0.9%. Shares of Mercedes-Benz traded 3.8% lower on the exchange in midafternoon trade. Porsche dropped 4.3%. Volkswagen held to a 1.4% slip.
Tokyo's Nikkei 225 closed down 0.6%. Toyota Motor dropped 2%. Honda shed 2.5% and Nissan moved 1.7% lower.
The Korea Stock Exchange's Kospi index closed with a 1.4% loss. Kia dumped 3.5%. Hyundai Motor fell 4.3%.
Hong Kong's benchmark Hang Seng Index closed 0.4% higher on Thursday. Shares of China-based automakers, which have little exposure to the U.S. market, ended mixed. Li Auto rose 0.5%. BYD added 2.3%. Nio fell more than 5%.
In U.S. trade, Nio fell 5.5%. XPeng dropped 2.5%. BYD advanced 4.2%.
Trump also hinted he could go easier on China tariffs as part of a TikTok deal. Meanwhile, Germany's economy minister called for a "decisive response to the tariffs" even as Trump threatened higher duties if trading partners retaliate.
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Please follow Kit Norton on X @KitNorton for more coverage.
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