Photo credit: www.cnbc.com
On April 1, 2024, employees were observed working on the assembly line of new energy vehicles at Leapmotor’s factory located in Jinhua, Zhejiang Province, China.
In a significant turn of events for the automotive industry, shares of major auto manufacturers experienced a sharp decline on Monday. This downturn followed the announcement by U.S. President Donald Trump, who imposed previously threatened tariffs on various goods from Canada, Mexico, and China.
On Saturday, Trump enacted executive orders that introduced a 25% tariff on goods from Mexico and most items from Canada, along with a 10% duty on Canadian energy products and goods imported from China, with these measures slated to take effect on Tuesday.
In his announcement, Trump cautioned that American consumers might experience “some pain” as a result of these tariffs, but he emphasized that the actions were essential due to what he described as a “major threat” posed by illegal immigration and dangerous substances, including fentanyl, entering the U.S.
In response, both Canada and Mexico threatened to retaliate with their own tariffs, further escalating tensions between the nations.
The announcement led to a dramatic sell-off in global automaker stocks, as investors expressed concerns about the implications of a potential trade conflict. Analysts predict that the tariffs could significantly affect the automotive sector due to its heavy dependence on North American manufacturing, especially in Mexico, and intricate global supply chains.
Japanese automakers were particularly hard hit, with shares of Toyota and Nissan dropping over 5%. Honda saw a more pronounced decline of 7.2%, and Mazda Motor Corp’s shares fell sharply by more than 7.5%. Additionally, Kia Motor Corp recorded nearly a 6% drop.
Over in Europe, the decline was also notable, as shares of Valeo, a French car parts supplier, and Renault, an established automaker, fell by 6.8% and 2%, respectively, during early trading. The French-Italian conglomerate Stellantis, associated with brands like Chrysler, Dodge, Jeep, and Maserati, saw its stock decrease by 6% on the same day. In Germany, Volkswagen’s shares slipped by 5%, while competitors Porsche and BMW experienced falls of around 3.5% each.
Trump has hinted at the possibility of extending tariffs to the European Union, which poses a looming concern for Germany’s automotive manufacturers. Leading companies like Volkswagen, Mercedes-Benz Group, and BMW have recently issued profit warnings, facing challenges due to economic stagnation and diminishing demand from China, the world’s largest car marketplace.
This developing story is being updated.
Source
www.cnbc.com