U.S. stocks closed down after volatile trading on Thursday in the first session since President Donald Trump announced 25% auto tariffs.
The tariffs have escalated a global trade war and prompted forecasts of higher car prices.
The major stock indexes opened the day with a slight drop before climbing into positive territory, just to once again fall into the negative by the afternoon.
The Dow Jones Industrial Average fell 155 points, or 0.35%, while the S&P 500 declined 0.3% on Thursday morning. The tech-heavy Nasdaq ticked down 0.5%. The drawdown marked the second consecutive day of losses for the three major stock indexes.
Shares of major U.S. automakers dropped on Thursday. General Motors dropped more than 7%, while Ford fell nearly 4%. Stellantis — the parent company of Jeep and Chrysler — declined 4%.
Tesla, the electric carmaker led by Trump-adviser Elon Musk, bucked the trend. Shares of Tesla ticked up 0.4% on Thursday.
The 25% tariffs will be applied to imported passenger vehicles, including cars, SUVs, minivans, cargo vans and light trucks, according to a White House fact sheet released after Trump’s Oval Office remarks on Wednesday. The tariffs will take effect on April 3.
The tariffs will also be applied to key imported auto parts, including engines, powertrain parts and electrical components.
The auto tariffs are set to target a sector that employs more than a million U.S. workers and relies on a supply chain intricately intertwined with Mexico and Canada. Tariffs placed on the auto industry risk raising car prices for U.S. consumers, experts previously told ABC News.
Ferrari may raise U.S. prices as much as 10% in response to the tariffs, the company said in a statement on Thursday. Dan Ives, a managing director of equity research at the investment firm Wedbush, predicted general tariff-related price increases of between $5,000 and $10,000 per vehicle.
Canadian Prime Minister Mark Carney on Wednesday called the measure “a direct attack on our workers.” The Canadian government plans to review its trade options, Carney said.
European Commission President Ursula von der Leyen on Wednesday expressed “regret” about the decision to impose auto tariffs. “We will now assess this announcement, together with other measures the US is envisaging in the next days,” von der Leyen said in a statement.
Early Thursday morning, Trump warned of retaliatory tariffs if officials in Canada and Europe move forward with countermeasures.
“If the European Union works with Canada in order to do economic harm to the USA, large scale Tariffs, far larger than currently planned, will be placed on them both in order to protect the best friend that each of those two countries has ever had!” Trump said in a post on Truth Social.
Carney responded on Thursday afternoon, saying the U.S. is “no longer a reliable partner.”
“With time, it will become apparent that these actions will end up hurting American workers and American consumers,” Carney said during a speech in Ottawa. “Our response to these latest tariffs is to fight.”
