NEW YORK (AP) — Shares of major automakers slumped following President Donald Trump’s announcement that he will place 25% tariffs on auto imports.
Automakers have spread out their supply chains and production facilities throughout North America. Parts and production steps often cross one or more borders during the process. That means it will cost the major automakers more money to build their cars and trucks.
The tariffs will take effect April 3.
“There are still a lot of unknowns, but if this remains in place, there will clearly be some pain for the companies to digest,” said Joseph Spak, analyst at UBS, in a note to investors.
Higher costs will likely force companies to raise prices on new vehicles at a time when consumers are already faced with near record-high car prices. The tariffs could boost inflation overall, hurting consumers who are growing more worried about the economy.
General Motors slumped 8.2%. The Detroit automaker could fare the worst among its peers under broad tariffs, as it sources about 40% of vehicles sold in the U.S. from Mexico and Canada, according to analysts at JPMorgan.
Ford, which slipped 4.2%, is less exposed with under 10% of vehicles sourced outside of the U.S., JPMorgan said.
Stellantis, which is based in the Netherlands but has significant manufacturing operations in North America, fell 2.5%.
Honda shares traded in the U.S. fell 2.7% and Toyota shares traded in the U.S. fell 2.4%.
The exception was Tesla. The cars it sells in the U.S. are produced domestically. Its shares rose more than 5%.
Auto parts suppliers also lost ground. Autoliv fell 3.7%, Aptiv slipped 5.6% and Gentex fell 1.7%.
Many automakers have been preparing for tariffs to impact their operations since Trump first announced plans to impose the taxes earlier this year. General Motors and others have worked to get more inventory into the U.S. ahead of any tariffs.
