President Donald Trump escalated trade tensions Tuesday by threatening to impose new 25% tariffs on automobiles, pharmaceuticals, and semiconductors, heightening concerns over a potential trade war. The announcement has sent ripples through financial markets, with investors bracing for potential volatility.
Let’s take a closer look at how stocks are reacting to the news.
Elon Musk-led Tesla (TSLA) saw its stock rise 2.2% to $363 on Wednesday, making it one of the top-performing stocks on the Nasdaq. Ford (F), on the other hand, was up less than 1%.
One key difference between Tesla and Ford is their production strategies. While Tesla manufactures its vehicles domestically, Ford imports approximately 20% of the cars it sells in the U.S. The new tariffs are expected to drive up costs, a concern highlighted by Ford CEO Jim Farley, who recently remarked that Trump’s tariffs are causing “a lot of cost and a lot of chaos.”
Foreign automakers also felt the impact of the tariff threat. The stock prices of Germany-based Volkswagen (VWAGY) and Japan’s Nissan (NSANF) were down more than 3% and 2%, respectively.
The escalating chip war between the U.S. and China, compounded by a series of retaliatory tariffs, is poised to have far-reaching consequences for the global AI industry.
Major AI stocks in the U.S., including Nvidia (NVDA), Super Micro Computer (SMCI), and Advanced Micro Devices (AMD), continued to climb Wednesday. However, Taiwan Semiconductor Manufacturing (TSM) saw its stock dip following President Trump’s latest remarks.
The tariff announcement had a positive impact on U.S.-listed pharmaceutical stocks on Wednesday, with companies like Eli Lilly (LLY), Novartis (NVS), Novo Nordisk (NVO), Pfizer (PFE), and Moderna (MRNA) all trading in the green.
However, the news dealt a severe blow to pharmaceutical companies based in India, where major players like Sun Pharma and Dr. Reddy’s Laboratories saw significant declines.
