Shares in a range of automakers have fallen sharply following confirmation that President Trump’s administration will impose tariffs on imported steel and aluminum.
On Thursday, President Trump revealed that imported steel will be hit with a 25 per cent tariff while imported aluminum will be hit with a 10 per cent tariff. The tariffs could be enforced as early as next week.
In response to the news, shares in General Motors closed almost 4 per cent lower. Additionally, Ford and Toyota shares dropped by about 3 per cent, Fiat Chrysler Automobiles by 2.8 per cent, and Honda by 2.7 per cent.
Following the drop in share prices, both General Motors and Toyota said the tariffs wouldn’t significantly impact them as most of their steel and aluminum comes from within the United States, CNBC reports.
Nonetheless, the American International Automobile Dealers Association (AIADA) said in a statement that the tariffs may result in a sharp rise in the prices of cars.
“Both metals are crucial to the production of cars and trucks sold in America today and would raise the sale prices of those vehicles substantially,” the statement said.
In addition, AIADA president and chief executive Cody Lusk said car manufacturers are not prepared to adsorb the costs the tariffs will add to production.
“These proposed tariffs on steel and aluminum imports couldn’t come at a worse time. Auto sales have flattened in recent months, and manufacturers are not prepared to absorb a sharp increase in the cost to build cars and trucks in America.”
The tariffs mark the latest move in the protectionist policies which helped Trump win the 2016 election.