Major automakers, including General Motors, Ford, and Stellantis, witnessed a decline in their shares on Tuesday following President-elect Donald Trump's announcement of imposing 25% tariffs on products from Mexico and Canada upon assuming office. The market response reflects concerns about potential disruptions to intricate supply chains that heavily depend on both Mexico and Canada for parts and production. The proposed tariffs are viewed as a threat to the interconnected nature of the auto industry in North America.
Despite Trump's aim to protect American workers and domestically manufactured vehicles through tariffs, the auto industry has operated as a unified market across North America for a long time. This integration is evident in the frequent movement of parts across borders between the three countries before final assembly and sale at dealerships.
The impact of Trump's tariff announcement was particularly noticeable on the stock prices of major automakers. General Motors experienced the most significant drop, with shares falling by 8% by Tuesday morning. Stellantis, the parent company of Chrysler, Jeep, Dodge, and Ram, saw a nearly 5% decline, while Ford shares dropped by 2%.
Foreign automakers with manufacturing plants in the United States, such as Toyota and Honda, also felt the repercussions of the news. US-listed shares of Toyota and Honda both fell by approximately 2% in response to the proposed tariffs.
