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Automobile stocks fell ahead of a planned announcement by President Donald Trump at 4 p.m. EDT on his plans for industry-specific tariffs.
The S&P 500 Automobiles sub-index fell by more than 5% as of 2 p.m. local time. Ford (F) stock fell 1.1%, General Motors (GM) declined 1.6% and Stellantis (STLA) slid more than 2%. The main S&P 500 index was down 1.3%, the Nasdaq Composite off 2.2% and the Dow Jones Industrial Average shed about 206 points.
Trump has also discussed tariffs “in the neighborhood of 25%” on imported vehicles, semiconductors, and pharmaceutical imports, which were originally expected to be announced in early April. The president is scheduled to make an announcement on “reciprocal” tariffs on April 2.
The tariffs could potentially affect almost all original equipment manufacturers, according to S&P Global Mobility (SPGI) research dated Jan. 28. U.S. automakers have assembly plants in Canada and Mexico and they use imported parts — as do foreign carmakers with American factories, including Volkswagen (VWAGY) and Nissan (NSANY).
A 25% duty on the average $25,000 cost of a vehicle imported from Mexico and Canada would add $6,250 in costs, S&P Global Mobility said. Cars that have parts imported from either country — such as a Ford F-series pickup with a Canadian engine — would also see a price increase.
The Michigan-based Anderson Economic Group estimates that a 25% tariff would add between $4,000 and $10,000 per car to vehicles assembled in North America, according to a recent presentation. A full-size SUV’s price would be increased by $9,000, while a battery-electric vehicle’s price would grow by $12,200.
In a softening economy where consumers are increasingly wary of making major purchases, auto companies may decide they can’t pass on the full price of the duties and will absorb the increases — which could lead to deferred investment and cost-cutting, including layoffs, economists said.
—With reporting by Will Gavin