[New York Stock Market] Trump’s 'Car Tariff Bomb' Causes Second Day of Decline... GM Plummets Over 7%

U.S. Imposes 25% Tariff on Imported Cars and Parts
Automotive Stocks Drop Across the Board... Tesla Rises on Limited Impact
Core PCE Price Index for February to Be Released

The three major indices of the U.S. New York Stock Exchange closed lower for the second consecutive day on the 27th (local time). The market remained unsettled due to concerns over tariffs after U.S. President Donald Trump announced a 25% tariff on imported automobiles the previous day. Automotive-related stocks, excluding Tesla, showed a broad decline, with U.S. automaker General Motors (GM) plummeting more than 7%.

Reuters Yonhap News

On this day in the New York stock market, the Dow Jones Industrial Average (Dow Index), which focuses on blue-chip stocks, closed at 42,299.7, down 155.09 points (0.37%) from the previous trading day. The S&P 500 Index, centered on large-cap stocks, fell 18.89 points (0.33%) to 5,693.31, and the Nasdaq Index, which is tech-heavy, dropped 94.98 points (0.53%) to 17,804.03.

By individual stocks, automotive-related shares declined. GM plunged 7.34%. Ford fell 3.93%, and Stellantis dropped 1.25%. Tesla, a U.S. electric vehicle company less affected by the tariff impact, surged more than 7% intraday but closed up 0.39%. Tesla is expected to suffer less damage from the new auto tariff measures because it produces vehicles sold in the U.S. domestically, unlike other automakers. Nvidia declined 2.05%, while Apple rose 1.05%.

President Trump announced the previous day that a permanent 25% tariff would be imposed on all foreign automobiles imported into the U.S. The 25% tariff applies not only to finished vehicles but also to key components. Previously, the U.S. imposed tariffs of 2.5% on passenger cars and small trucks, and 25% on pickup trucks, but this new measure standardizes the tariff rate for all imported vehicles at 25%. The tariff will take effect at midnight Eastern Time on April 3. President Trump stated that this measure is "permanent" and that "vehicles produced in the U.S. will have no tariffs at all." He emphasized that if the European Union (EU) and Canada cooperate in retaliatory measures against the U.S., "much larger" tariffs will be imposed. He also reaffirmed the plan to impose reciprocal tariffs on May 2. Regarding reciprocal tariffs, President Trump said, "We will be very generous," but added that "all countries" are subject. He also hinted at additional tariffs on items such as pharmaceuticals and lumber, suggesting that the tariff front will widen further.

Samir Samana, Chief Global Market Strategist at Wells Fargo Investment Institute, analyzed, "The way trade policies are being implemented is so indiscriminate that it is unsettling investors."

As President Trump's tariff front expands comprehensively, future stock market outlooks are divided.

Daniel Skelly, Head of Asset Management Market Research and Strategy at Morgan Stanley, said, "Despite the recent stock market rebound, it has been confirmed once again that volatility continues due to policy uncertainty. Moreover, next week's (reciprocal) tariff deadline is more likely to be a starting point for negotiations rather than a conclusion, so the market may find it difficult to recover to higher levels." On the other hand, strategist Samana said, "If a trade and tariff system is established within the next few weeks and companies and consumers can make decisions with clarity again, everything will have been a short-term slowdown, and we are likely to get back on track to some extent."

The U.S. economic indicators released on this day were positive. The U.S. Department of Commerce's Bureau of Economic Analysis (BEA) announced that the final figure for real Gross Domestic Product (GDP) in the fourth quarter of last year increased by 2.4% annualized compared to the previous quarter. This exceeded the previously announced preliminary figure (2.3%) by 0.1 percentage points, indicating that the U.S. economy grew faster than initially estimated. Personal Consumption Expenditures (PCE) rose 4% in the fourth quarter compared to the previous quarter, slightly below the preliminary figure (4.2%) by 0.2 percentage points. The core PCE price index, which the Federal Reserve (Fed) places the most importance on, was revised downward from 2.7% to 2.6%.

Brett Kenwell, U.S. investment analyst at eToro, analyzed, "Investors will want to see inflation indicators similar to or better than current levels and strong employment figures to gain reassurance about the current economic conditions."

Investors' attention is focused on the core PCE price index for February, which will be released on the 28th. According to Bloomberg's forecast, the core PCE price index is expected to rise 2.7% year-over-year, an increase from 2.6% in January.

U.S. Treasury yields showed mixed movements. The 10-year U.S. Treasury yield, a global bond yield benchmark, rose 2 basis points (1bp = 0.01 percentage points) to 4.36% compared to the previous trading day, while the 2-year U.S. Treasury yield, sensitive to monetary policy, fell 1 basis point to 3.99%.