Stocks slip as US imposes auto tariffs, worries over trade war intensify
Stocks fell as the US moved forward with tariffs on automakers, fueling concerns about a widening trade war, which overshadowed data indicating stronger-than-expected growth in the world's largest economy.
Just days before the end of a quarter that’s set to be the worst for the S&P 500 since 2023, the gauge came under renewed pressure. Automakers from Toyota Motor Corp. to Stellantis NV, Mercedes-Benz Group AG and General Motors Co. got hit, News.Az reports, citing Bloomberg.
Most megacaps rose, with Tesla Inc. and Apple Inc. leading the charge. The bond market is flashing concerns about the impact of tariffs on inflation, with short-dated Treasuries outperforming longer ones.
President Donald Trump signed a proclamation to implement a 25% tariff on auto imports and pledged harsher punishment on the EU and Canada if they join forces against the US, expanding a trade war and triggering threats of retaliation.
The US economy expanded at a faster pace in the fourth quarter than previously estimated amid a robust increase in corporate profits — while a key measure of inflation was revised lower. Separate data showed a pick up in pending home sales and a still fairly resilient labor market.
The S&P 500 fell 0.3%. The Nasdaq 100 lost 0.4%. The Dow Jones Industrial Average dropped 0.4%. Advanced Micro Devices Inc. sank as analyst downgraded the shares on concern the chipmaker is falling further behind Nvidia Corp. in its technological capabilities. GameStop Corp. is seeking to sell $1.3 billion of convertible bonds to fund Bitcoin purchases.
The yield on 10-year Treasuries rose two basis points to 4.37%. The dollar was little changed. Mexico’s peso and Canada’s loonie led losses in major currencies.
The auto tariffs were unveiled ahead of an even broader announcement of so-called reciprocal tariffs expected April 2 — a bid to drive down other countries’ barriers and shrink US trade deficits.
Those tariffs will see the US apply rates on a country-by-country basis to counter barriers levied on American imports. Trump, though, has signaled some trading partners may receive possible exemptions or reductions in duties.
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