(Bloomberg) — Auto shares around the world slumped Monday after US President Donald Trump’s new tariffs threatened to cut into sales from factories in Mexico and Canada.
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Stock in Toyota Motor Corp. and Nissan Motor Co. dropped in Asia trading, while Volkswagen AG and Stellantis NV led the steepest intraday decline in European auto shares since April. General Motors Co. and Ford Motor Co. were down in US pre-market trading.
Trump’s 25% tariffs on goods from Mexico and Canada, set to start Tuesday, are throwing decades-old supply chains into question, particularly for carmakers from around the globe that have set up manufacturing hubs in Mexico, largely to supply the US market. German auto suppliers operate more than 330 sites in Mexico, while the country’s automakers own several factories there that produced 716,000 passenger cars in 2023.
The levies add to an already difficult time for carmakers that are grappling with weaker demand in key markets, especially for electric vehicles, and intensifying competition from Chinese manufacturers. A stock index of European auto makers and parts suppliers has fallen about 12% in the past year.
VW, which exported more than 500,000 vehicles last year to the US from Mexico, fell 6.7%, while Stellantis, the next biggest European producer there, declined 7%. While Toyota’s stock closed 5% lower, Nissan plunged as much as 10% before paring losses.
In addition to Ford and GM, electric-vehicle makers Tesla, Rivian and Lucid were also down in US pre-market trading.
Shares of luxury-car makers BMW AG and Mercedes-Benz Group AG also fell 6.5% and 5.3%, respectively. BMW, which employs about 3,700 workers at its plant in San Luis Potosi, exported 95,151 vehicles to the US from Mexico last year.
As for auto parts suppliers, Valeo SE and Forvia SE are likely to be among the hardest hit, according to Oddo BHF analysts led by Michael Foundoukidis. Valeo shares fell 9%, while Forvia declined 13%.
VW exported 526,535 vehicles to the US from Mexico last year, according to Mexico’s statistics agency. The company has major manufacturing sites in places including Puebla and San Jose Chiapa, and employs thousands of workers there.
“Import tariffs on cars sold in the U.S. but produced outside of the US have direct consequences on the profitability of manufacturers,” Moritz Kronenberger, a portfolio manager at Union Investment, said in an email. “Prices are expected to rise by several thousand dollars to offset the tariffs, which will in turn impact sales volume.”