NEW TARIFFS
The President of the United States announced new 25% tariffs on all cars and auto parts that are not manufactured in the U.S. Yes, you heard that right. Starting April 2nd, a 25% surcharge will be applied to every imported car, truck, and even spare parts like engines, transmissions, and electrical components. That means it’s not just about fully assembled vehicles—it also includes parts that even American automakers rely on for assembling their own cars!
And as if that wasn’t enough, he also threatened even higher tariffs on the European Union and Canada if they dare to collaborate against him to cause “economic damage.” As he posted on Truth Social:
"If the EU works with Canada to harm the U.S. economy, much higher tariffs will be imposed to protect their best friend."
Yep, that’s how a global trade crisis begins—with a single post. Because if there’s one thing Trump knows how to do, it’s light fires.
MARKETS
Now, you're probably wondering, How did the markets react? Chaos. Panic. Sell-off.
As expected, automakers’ stocks nosedived immediately after the announcement.
Stellantis
-6% for the week
Mercedes
-4.5% for the week
BMW
-4.9% for the week
Volkswagen
-4.5% for the week
And that’s not all. The Stoxx Europe Autos Index dropped 1.14%, and the general market sentiment was basically What the hell just happened? Investors fear new inflationary pressures and the escalation of a trade war. And if you think that’s an overreaction, analysts at Wedbush predict that the average price of a car could increase by $5,000 to $10,000, depending on the model.
According to Will Scharf, an advisor to Trump, these new tariffs are expected to bring in over $100 billion annually to U.S. coffers. Of course, the real cost will be passed directly to consumers, who will once again see their wallets emptying.
REACTIONS
And how did Europe and Canada react? Well… not well.
Germany’s Minister of Economy, Robert Habeck, called it a "disaster for Germany, the EU, and the U.S." and urged the EU to respond “decisively.”
Meanwhile, automakers are deeply concerned. The president of the German Association of the Automotive Industry said that these measures disrupt global supply chains and will have negative consequences for everyone—including U.S. consumers.
BMW, Mercedes, Volvo, Renault, and other major players have either issued statements of concern or are internally assessing the impact.
P.S Meanwhile Tesla is the company that gains the most from these tariffs.
Posted Using INLEO
