Auto Stocks Drop as Trump Plans 25% Tariff on Car Imports
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What are the implications of Trump's 25% tariff on car imports?
President Trump makes good on his pledge to penalize foreign carmakers, announcing plans for 25 percent tariffs on global imports. Plus, European leaders move to build a Ukraine support force without the U.S. And the used phone market takes off.
If you buy a secondhand phone, you pay a third of the price, maybe half the price for a phone that's pretty similar to a brand new one.
It's Thursday, March 27th. I'm Luke Vargas for The Wall Street Journal, and here is the AM edition of What's News, the top headlines and business stories moving your world today. global reaction is pouring in after President Trump yesterday evening announced that the U.S. would impose 25 percent tariffs on all automotive imports starting April 3rd. The announcement appeared to dispel any chance of an exemption for countries like Mexico and Canada, which have a free trade agreement with the U.S. and would be added on top of 25 percent tariffs on goods from those countries that Trump had already imposed.
How will the tariffs affect North American trade relations?
Canadian Prime Minister Mark Carney was quick to respond, invoking the interests of the country's unionized auto workers and its bilateral trade with the U.S.
And this is a direct attack, to be clear, a direct attack on the very workers that I stood in front of, uniform workers I stood in front of this morning at the Ambassador Bridge, a bridge that is a symbol and a reality up until now. of the tight ties between our two countries, ties of kinship, ties of commerce, ties that are in the process of being broken.
Carney pledged to respond to the U.S. tariffs, but said he'd first wait to see the details of Trump's executive order. The province of Ontario is home to the bulk of Canada's auto industry, and its premier said yesterday that car plants on both sides of the border would shut if Trump's plans went ahead. Meanwhile, we've yet to hear a response from Mexico, the biggest auto exporter to the U.S. The country sends a number of popular vehicles north of the border, including GM, Ram, and Toyota pickups, luxury models from BMW and Audi, and affordable sedans from Nissan, though industry officials are warning that the tariffs could trigger price hikes that put vehicles further out of reach for Americans after sizable cost increases since the pandemic. Glenn Stevens Jr.
is the executive director of Misch Auto, a business group that represents Michigan's auto sector.
What we're concerned about is the average transaction price of a vehicle is already at around $49,000, near an all-time high. So incremental or even major shifts in that pricing is going to affect demand, and that's a concern of us because that has a backward push on the supply chain with regards to production cuts and maybe employment cuts.
What is the European and Asian automakers' reaction to the tariffs?
So what reaction are we seeing from automakers beyond North America and how are major players in the industry responding? For more, I'm joined by Journal European Autos reporter Stephen Wilmot. Stephen, first, what has the broad reaction been to this from a sector that has very much been in Trump's crosshairs since even before he took office? Were there any details of what was announced yesterday that have caught folks off guard?
Well, I think this really was about the worst case scenario for global automakers and the US trading partners. So we have seen quite a strong negative share price reaction. The German players are down 4% to 5% in Europe this morning. That followed falls on Asian stock markets. The worst affected was Hyundai. which isn't surprising because it's actually one of the companies that ships most to the US. It always used to be Japan that was number two, but South Korea has taken it over. And one of the reasons for that is, well, Hyundai and Kia have been extremely successful in the US. And because their success is relatively recent, they haven't localized as much of their production as the Japanese players who are more mature in the market.
Japanese carmakers also falling today, and unsurprisingly, Japan's prime minister shot back pretty quickly to Trump's announcement, adding that Tokyo will be looking at all options as it decides how to respond. The European Commission president also saying that the bloc would safeguard its economic interests. Where is all of this leading?
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Chapters
5 chapters
1
What are the implications of Trump's 25% tariff on car imports?
0:03–1:09
2
How will the tariffs affect North American trade relations?
1:09–2:57
3
What is the European and Asian automakers' reaction to the tariffs?
2:57–4:54
4
How might the tariffs impact global car prices and demand?
4:54–7:40
5
Could the tariffs benefit American auto workers?
7:40–12:21
Speakers
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