Global Stock Markets Plunge Due to U.S. Tariffs on Automobiles

On Wall Street, stock prices sharply fell on Wednesday as investors were nervous ahead of U.S. President Donald Trump’s press conference regarding tariffs on automobile imports.

The Dow Jones index weakened by 0.31 percent, to 42,454 points, while the S&P 500 slid 1.12 percent, to 5,712 points, and the Nasdaq index fell 2.04 percent, to 17,899 points.

After rising in the first two days of this week, the indices lost a significant portion of those gains yesterday as market nerves prevailed due to the trade war.

During trading, the White House announced a press conference regarding tariffs on automobile imports.

Trump had announced these tariffs earlier this year, but investors hoped he would back down or that Washington would reach some agreement with trading partners in the meantime.

However, none of that happened, and Trump stated at the press conference that starting April 2, he would impose a 25 percent tariff on all vehicles not manufactured in the U.S.

EC on Trump’s Car Tariffs – We Will Protect Our Interests

The European Commission will analyze and assess U.S. President Donald Trump’s announcement of a 25 percent tariff on automobile imports into the United States, the EC announced late Wednesday.

Other measures announced by the U.S. President will also be considered.

– As I have already said, tariffs are taxes, they are bad for companies, and worse for consumers equally in the U.S. and the European Union – said European Commission President Ursula von der Leyen in a statement.

The Union will continue to seek solutions while protecting its economic interests, she added.

– As a major trading power and a strong community of 27 member states, we will jointly protect our workers, companies, and consumers across our European Union – concluded Ursula von der Leyen.

Decline in Tech Stocks

In addition to the automotive sector, technology company stocks were also under pressure yesterday.

Of the 11 major sectors of the S&P 500 index, stock prices fell in six, with the most significant declines of over 2 percent in the communication and information technology sectors.

Among the biggest losers was the stock of chip manufacturer Nvidia, with a price drop of nearly 6 percent, and Tesla, with a decline of about 5.5 percent.

Markets are now expecting reactions from the countries most affected by the new tariffs, as well as new decisions from Washington, given that Trump recently announced that starting April 2, he would impose reciprocal tariffs on imports from all countries that charge tariffs on U.S. product imports.

– Markets hate this uncertainty regarding tariffs, especially as it relates to the automotive industry. These tariffs could have a significant negative impact on the economy – says Jamie Cox, partner at Harris Financial Group.

Due to the trade war, Barclays analysts lowered their target level for the S&P 500 index yesterday to 5,900 points, down from the previous 6,600 points.

After yesterday’s decline, the S&P 500 is down about 3 percent since the beginning of the year, and the Nasdaq index is down more than 7 percent.

European Markets Sharply Decline Due to New Tariffs

On European exchanges, stock prices sharply fell on Thursday morning, particularly in the automotive sector, after Washington announced new tariffs of 25 percent on all automobile imports.

The STOXX 600 index of leading European stocks was down about 1 percent at 9:30 AM, hitting its lowest level in two weeks.

The London FTSE index weakened by 0.60 percent, to 8,635 points, while the Frankfurt DAX plummeted 1.53 percent, to 22,488 points, and the Paris CAC fell 1.23 percent, to 7,930 points.

The decline in the index is primarily due to falling stock prices of automobile manufacturers, after U.S. President Donald Trump stated last night that starting April 2, he would impose a 25 percent tariff on all vehicles not manufactured in the U.S.

Analysts say this will primarily affect the European Union, Japan, and South Korea.

The EU, Canada, and Japan have already announced countermeasures, and new decisions from Washington are expected in the coming days, given that Trump recently announced that starting April 2, he would impose reciprocal tariffs on imports from all countries that charge tariffs on U.S. product imports.

This morning, stock prices in the automotive sector fell the most, by over 3 percent. Prices of Volvo, Continental, Volkswagen, BMW, and Porsche fell between 2.5 and 4.2 percent.

The German Minister of Economy and the local automotive association sharply criticized the new tariffs and warned that they could harm both the European and U.S. economies. They called for urgent negotiations to avoid a spiraling trade war.

Stock prices also fell on most Asian exchanges. The MSCI index of Asian stocks was down 0.3 percent at 9:30 AM.

The Japanese Nikkei index weakened by about 0.6 percent, while stock prices in Australia and South Korea fell between 0.4 and 1.4 percent. In Shanghai and Hong Kong, however, they rose between 0.2 and 0.6 percent.