Trump's Tariffs Threaten Turmoil in U.S. Auto Industry

President Trump announced a 25% tariff on all vehicles and foreign-made auto parts entering the U.S., potentially raising car prices and disrupting North American auto production. The decision has affected the stock prices of major car manufacturers globally and sows uncertainty in the automotive industry.

President Donald Trump announced on Wednesday a sweeping 25% tariff on all vehicles and foreign-made auto parts entering the United States. This move, if prolonged, could substantially increase the average cost of vehicles in the U.S. and disrupt the intertwined North American auto production network that has been established over decades.

The market reacted sharply to the announcement, with shares of major U.S. automakers like General Motors, Ford, and Stellantis experiencing a noteworthy dip. Asian car makers, including Toyota, Honda, and Hyundai, also saw a decline in their stock prices. Tesla, which manufacturers its vehicles in the U.S. but uses some imported parts, faced a smaller drop in value.

The tariff announcement is seen as part of Trump's strategy to bolster U.S. investments in manufacturing and auto production. However, industry groups have raised concerns over increased production costs, higher vehicle prices, and potential job losses in the U.S. As indicated by the White House, the tariffs will apply to critical automotive components, likely disrupting North American production and lowering output.

(With inputs from agencies.)