Donald Trump's announcement that he would impose tariffs on automotive imports from Mexico, Canada and China weighed heavily on the share prices of car manufacturers on Tuesday. However, the broad stock markets reacted surprisingly calmly to this news.
While the S&P 500 and Nasdaq posted modest gains of 0.3% and 0.5%, respectively, Europe's Stoxx 600 closed down 0.6%. However, the impact was clearly felt in the automotive sector, with General Motors losing up to 8.5%, Nissan 4%, Stellantis 5% and Daimler Truck 6%. Manufacturers with production facilities in Mexico that produce for the US market are particularly affected.
Trump's plan includes an additional 10% tariff on Chinese goods and a 25% levy on "all products" from Mexico and Canada. Interestingly, Chinese stocks reacted relatively calmly, falling by only 0.2% as the proposed tariffs came in lower than some analysts feared.
The restrained reaction of the markets outside the auto sector indicates that Trump's statements will initially be interpreted as a negotiating tactic. Investors seem to be waiting to see how these announcements will translate into concrete trade policy.
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