Shares in automakers around the world tumbled on Thursday after President Trump announced plans to impose a 25 percent tariff on imported cars and some parts beginning next week.
Among the hardest hit were carmakers based in Germany, Japan and South Korea, which sell many of their cars in the United States and rely on complex supply chains that cross borders, including from production sites in Mexico and Canada.
Shares in Germany’s Volkswagen, Europe’s largest automaker, fell 1.5 percent. Other German carmakers like Mercedes-Benz and BMW dropped 2 to 3 percent in early European trading.
Stellantis, the parent of Chrysler, Fiat, Jeep, Peugeot and Ram, saw its European shares fall about 4 percent.
The stocks of Japan’s Toyota Motor, Honda Motor and Nissan Motor all fell about 2 percent in Tokyo. Shares in South Korea’s Hyundai Motor and Kia fell 3 to 5 percent in Seoul.
The major Detroit carmakers, which build some of their vehicles in Canada and Mexico, were also hit hard. Shares in General Motors were down more than 6 percent in premarket trading and Ford’s shares were about 3 percent lower.
Shares in India’s Tata Motors slumped nearly 6 percent. The company owns the British company Jaguar Land Rover, which imports all of the luxury cars it sells in the United States. Germany’s Porsche, whose stock dropped 4 percent, also imports all of the cars it sells in America.
Nearly half of all vehicles sold in the United States are imported, as well as nearly 60 percent of the parts in vehicles assembled there. For many foreign carmakers, the United States is a critical market: Nearly one of every three Porsches, and one of every six BMWs, is shipped there. German companies also export about $8 billion in car parts to the United States.
“Since all countries in the world are affected, it is likely to be difficult for countries like Germany to redirect cars to third countries and sell them there,” analysts at Commerzbank wrote in a note.
The slump in auto stocks pulled down the benchmark stock indexes in big exporting countries. Germany’s DAX fell nearly 1 percent, while South Korea’s KOSPI dropped 1.4 percent and Japan’s Nikkei 225 was down 0.6 percent.
On Wednesday, Mr. Trump said he expected the auto tariffs to be permanent. Still, many financial analysts believe that the economic damage could be so severe that the tariffs would be scaled back.
“We think it is unlikely that the new tariff regime will last, given the widespread damage they will do across industries and the inflationary impact on the U.S. economy,” analysts at Bernstein wrote.
But investors have recently been wrong-footed by the administration’s aggressive trade approach, which also includes steep additional tariffs on all U.S. imports of goods from China and a large share of goods from Canada and Mexico. Mr. Trump and his advisers have said that a recession is possible, stressing that the short-term pain would be worth it in the long term.
“It is hard to judge the duration of such chainsaw-like policies if these cause a market slump that does not appear to be transitory,” the Bernstein analysts added.
The fallout in stock markets on Thursday was mostly concentrated in the car industry. Futures for the S&P 500 index suggested it would open slightly higher, after it dropped more than 1 percent on Monday on news that auto tariffs would be announced after the market closed.
Shares in Tesla, which is set to suffer less from tariffs than its competitors because it makes all the cars that it sells in the United States in California and Texas, were slightly stronger in premarket trading. Mr. Trump said Wednesday that Elon Musk, Tesla’s chief executive who has taken a leading role in the White House, had not influenced his decision to impose tariffs.
