Wall street dips as auto tariffs weigh on stocks, economic data offers some relief

US stock market experienced mixed movements on Thursday as President Donald Trump's latest tariff announcement on imported cars weighed down automakers, while positive economic data provided some support for the market.

The S&P 500 showed little movement in the morning, recovering from an earlier dip. As of 10 a.m. Eastern time, the Dow Jones Industrial Average was down by 33 points, or 0.1%, and the Nasdaq Composite was also lower by 0.1%, according to news agency AP.

General Motors led the losses, plunging 5.9% after Trump revealed a 25% tariff on imported vehicles. Ford Motor followed suit, dropping 2.1%. Even US automakers felt the impact of the tariffs due to their extensive supply chains across North America. President Trump has emphasized the desire for auto production to take place within the US to reduce dependency on imports.

“There are still many unknowns, but if these tariffs stay in place, the companies will certainly face challenges,” said Joseph Spak, an analyst at UBS.

Complicating matters, the US government faces the challenge of determining how to apply tariffs to parts made under the North American free trade agreement but not in the US Tracking such parts could prove difficult, Spak noted.

Automakers outside the US were also hit. Honda Motor fell 2.5% in Tokyo, while Toyota Motor dropped 2%, and Hyundai Motor in Seoul fell 4.3%.

Electric vehicle makers, such as Tesla and Rivian, performed better. Both companies, with more production in the US, are less affected by the new tariffs. Tesla rose 2.7%, and Rivian gained 3.1%.

There is growing uncertainty about the impact of Trump’s upcoming “Liberation Day” tariffs, set for April 2, when he plans to introduce reciprocal tariffs on the US’s trading partners, matching the trade burdens they impose on the US Many are hopeful that Trump might opt for more targeted or less severe tariffs, which could lessen the global economic pain. However, the constant talk of tariffs has already raised concerns, making both US consumers and businesses more cautious.

Despite the tariff concerns, recent economic reports have been more encouraging. A new report revealed that fewer workers applied for unemployment benefits than expected, signalling a strong job market. Additionally, a second report indicated that US economic growth in the final quarter of 2024 was stronger than initially thought.

These positive economic reports helped keep Treasury yields steady, with the yield on the 10-year Treasury bond edging up to 4.36% from 4.35% the previous day.

Among individual stocks, Petco Health & Wellness saw a major gain of 33.4%, after reporting better-than-expected results for its most recent quarter.

Overseas, European stock indexes fell, following the declines in automakers' shares. Japan's Nikkei 225 dropped 0.6%, while Prime Minister Shigeru Ishiba called for tariff exemptions on Japan. In contrast, stocks in China rose slightly, with Shanghai up by 0.1% and Hong Kong gaining 0.4%.

Chinese automakers have been expanding internationally, but have not yet made significant inroads into the US market, so the tariffs' impact on them would be indirect.

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