Auto Tariff Sticker Shock
Image President Trump's latest tariffs on the auto sector are being felt around the world. Credit... Carlos Osorio/Reuters
Global stocks have run into a ditch on Thursday.
The sell-off comes as President Trump doubled down on his threat to roll out 25 percent tariffs on auto imports beginning next week — and duties on auto parts shortly afterward — potentially upending an industry built on a complex global supply chain, reigniting inflation and inflaming trade war tensions.
Hopes that negotiators can work out a deal are dimming. Trump said the tariffs were permanent. He also sees them as a revenue stream: The White House calculates that it could raise $100 billion annually. The tariff threat, however, has zapped more than that from the largest carmakers' market capitalization in recent weeks.
Tariff gloom already snapped the S&P 500's three-day winning streak on Wednesday. And a reminder: Reciprocal tariffs are still set for April 2.
Here's the latest: Shares in European automakers were down sharply on Thursday. Mercedes and Porsche alone could see tariffs wipe out a combined $3.7 billion in operating profits, Bloomberg calculates.
General Motors is down more than 6 percent in premarket trading.
Tesla is seen as less affected by the measures, but Elon Musk warned on X that 'Tesla is NOT unscathed here. The tariff impact on Tesla is still significant.' (Like its rivals, it depends a lot on imported parts.)
Consumers appear set to face the brunt of tariffs. Automakers could see costs rise by $6,700 per vehicle sold, Daniel Roeska, an analyst at Bernstein, wrote in a research note on Thursday.
The big question: How much of that will the companies absorb, and how much will they add to the sticker price? Either way, the levies are likely to dent their profits and force consumers to pay more.
Households were already bracing for pain from Trump's trade moves. The prospect of higher car prices comes as consumer sentiment has plummeted, reigniting concerns about an economic downturn.
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