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Auto Stocks Drop Amid Speculation on Trump Tariff Plans

Image Credit: Wikimedia Commons

Auto stocks fell in premarket trading Wednesday following a CNN report suggesting President-elect Donald Trump may declare a national economic emergency to introduce new tariffs. Major automakers, including General Motors, Ford, Tesla, and Stellantis, saw early losses. Electric vehicle (EV) companies Rivian and Lucid dropped 1.3%, while Chinese EV makers Nio, XPeng, and Li Auto experienced steeper declines of 2–3%.

The report, citing four sources, claims Trump is exploring the International Economic Emergency Powers Act (IEEPA) to impose tariffs without needing proof of national security risks. This has raised concerns among investors about potential supply chain disruptions and increased costs for automakers and tech firms.

Chipmakers were also impacted, with Cirrus Logic losing 1%, Marvell Technology 0.8%, and Lam Research 0.4%. Analysts at Vital Knowledge noted the news is concerning but doesn’t yet provide clarity on tariff specifics such as product scope, rates, or timing.

Other legal options under consideration include sections 338 and 301 of U.S. trade law, which could facilitate additional tariffs but may face delays and legal challenges. Analysts expect new tariffs will likely be implemented, though they may be less severe than previously suggested during the campaign.

The potential measures align with Trump’s strategy to reset global trade and promote U.S. manufacturing. However, analysts warn that using tariffs as a negotiation tool will keep trade uncertainties high, maintaining pressure on global markets.

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