U.S. President Donald Trump imposed a 25 percent tariff on imported vehicles on Wednesday night, fueling inflation concerns that weighed on financial markets.
After market fluctuations, the S&P 500 closed down 0.3 percent, while the Dow Jones Industrial Average and Nasdaq dipped by 0.4 percent and 0.5 percent, respectively, on Thursday.
General Motors took the brunt to the impact of the news on Trump’s new tariff imposition, with the stock of the carmaker plunging 7.4 percent, the largest lost for the day among S&P 500 companies. GM’s drop was attributed to its heavy reliance on imports from countries such as Mexico and South Korea.
Other automakers were also sideswiped. Ford fell 3.9 percent, and Stellantis, the owner of Jeep, dropped 1.1 percent.
The tariff is expected to raise vehicle prices by USD5,000 to USD15,000, depending on the model’s price range.
Even domestically manufactured cars could see price increases, as many use foreign-made components that are also subject to the new import taxes. Analysts estimate that U.S.-made cars could face price hikes ranging from USD3,000 to USD8,000.
While the Trump administration claims the tariffs will boost U.S. manufacturing and jobs, critics said they could spur inflation and harm economic growth, worsening cost-of-living challenges for consumers. The decision highlights the growing concerns over the impact of Trump’s trade policies on the broader economy.
Meanwhile, the U.S. Federal Reserve had earlier kept its monetary policy easing plan on hold as it awaits new economic data, particularly on jobs and inflation.
