The prospect of a trade war in North America has triggered stock market declines for the automotive sector, affecting both major European groups—which saw their shares drop by up to 6.5% as of 10:30 AM this Monday—and Japanese manufacturers, which experienced losses of up to 7.5% by the close of the Tokyo Stock Exchange.
Specifically, Stellantis, which operates factories in Mexico, the United States, and Canada, saw its shares fall 6.53% to 12.11 euros per share on the Milan Stock Exchange as of 10:30 AM.
Meanwhile, the German group BMW, which has a plant in the Mexican state of San Luis Potosí, recorded a 3.92% drop, with its stock price falling to 75.5 euros per share on the Frankfurt Stock Exchange.
Europe’s largest automaker, Volkswagen, which operates multiple plants in Mexico, was also in the red this morning. Its shares dropped 4.72% to 95.8 euros per share on the Frankfurt Stock Exchange as of 10:30 AM.
The French group Renault, which also has manufacturing plants in the Latin American country and the region, saw its shares decline by 2.13% to 48.59 euros per share on the Paris Stock Exchange.
Japanese automakers also faced a “Black Monday” in the stock market, with Mazda leading the declines.
The manufacturer of the CX-3, which produces this model at its plant in the Mexican state of Guanajuato, saw its stock plummet 7.53% at the close of the Tokyo Stock Exchange, falling to 985.3 yen per share.
Following Mazda, Honda—which manufactures its HR-V model in the Mexican city of Celaya and operates a plant in Ontario, Canada—saw a 7.2% drop, bringing its stock price down to 1,372 yen per share.
Nissan fell 5.62% to 403.7 yen per share, while Toyota, the world’s largest automaker by sales volume, lost 5.01%, bringing its stock price down to 2,824.5 yen per share.
All of these companies have plants in the region.
A Potential Trade War Takes Effect This Tuesday
Automakers, whose parts and components cross the borders of the three signatory countries of the USMCA trade agreement (Mexico, the United States, and Canada) more than eight times during production, are on edge as tariffs are set to take effect.
These include a 25% tariff on goods imported into the U.S. from Mexico and Canada, and a 10% tariff on imports from China, following their approval last Saturday by President Donald Trump.
Trump defended his decision to raise tariffs on China, Mexico, and Canada on Sunday, though he admitted the new rates “could cause some pain.”
However, he insisted that “the price will be worth it.”
The U.S. president also stated that he would speak on Monday with his Mexican counterpart, Claudia Sheinbaum, and Canadian Prime Minister Justin Trudeau before the 25% tariffs on imports from these two countries take effect. He justified the move by citing the “great threat of illegal foreigners and deadly drugs” such as fentanyl.
“I don’t expect anything too dramatic. We imposed tariffs. They owe us a lot of money, and I’m sure they will pay,” Trump said on Sunday night while speaking to the press.
The Mexican and Canadian leaders spoke over the weekend following the White House’s tariff announcement.
During their call, they discussed the “importance of preserving North America’s competitiveness and prosperity” as well as their “respective efforts to improve border security and combat the production and distribution of illegal drugs,” according to a statement from Trudeau’s office.
Potential Tariffs on Europe
On Sunday night, Trump also renewed his threats to impose additional tariffs on the European Union, accusing it of being “really out of line.”
“They don’t take our cars, they don’t take our agricultural products. They take almost nothing, and we buy everything from them—millions of cars, huge amounts of food, and agricultural goods,” he stated upon arriving in Maryland from Florida.
“I wouldn’t say there’s a set timeline, but it will be pretty soon,” he added.
Regarding the impact of the tariffs on imports from Mexico and Canada, he said:
“Will it hurt? Maybe, or maybe not, but we will make America great again. And the price we will pay will be worth it because we are now a country governed by common sense, and the results will be spectacular.”
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