Market Drop as Trump Dismisses Auto Tariff Impact

Investors Brace for Market Volatility as Trump Plans Sweeping Tariffs

U.S. stock futures dipped on Sunday as investors grew anxious over President Donald Trump’s forthcoming reciprocal tariffs, which he signaled would target nearly all countries. The tariffs, aimed at addressing perceived trade imbalances, are expected to be announced this week.

“I couldn’t care less if the prices on foreign cars go up; they’re going to buy American cars,” Trump stated in a Saturday interview with NBC News. “We have plenty.”

The planned 25% tariffs on foreign-made cars and auto parts are set to take effect on Thursday. Additional tariffs, potentially as high as 20%, could be imposed on a broader range of imports, according to the Wall Street Journal.

Market Reactions and Growing Uncertainty

At 11 p.m. Eastern on Sunday, Dow Jones Industrial Average futures (YM00) fell around 180 points or 0.4%, while S&P 500 futures (ES00) slipped 0.7% and Nasdaq-100 futures (NQ00) declined 1.2%. Bitcoin (BTCUSD) also lost ground, falling below $82,000.

On Friday, the Dow tumbled 1.7%, the S&P 500 dropped 2%, and the Nasdaq Composite sank 2.7%, extending March’s losses. Concerns over tariffs, inflation, and weak economic data have fueled worries of stagflation—a period of low growth and high inflation.

Overseas markets mirrored these concerns, with Japan’s Nikkei 225 falling 4%, and stocks in Hong Kong (HSI -1.3%), South Korea (KOSPI -3%), and Australia (ASX 200 -1.74%) also declining.

Trump Dismisses Price Hike Concerns

Trump denied reports that he advised U.S. automakers against raising prices in response to tariffs. “No, I never said that,” he told NBC News. “I couldn’t care less if they raise prices, because people are going to start buying American-made cars.”

A White House aide later clarified that Trump’s comments referred to foreign-made cars. Despite this, economists warn that the tariffs will likely drive up prices, even for domestic vehicles, due to the higher cost of imported parts.

Industry Experts Expect Significant Price Increases

Morgan Stanley analysts forecast that car prices could rise by 11% to 12% on average as automakers pass on tariff costs to consumers. Bloomberg Intelligence’s Steve Man warned of further strain on already thin profit margins for automakers.

“Even if Trump pressures companies to maintain prices, the financial impact will be severe,” Man said. “There’s no avoiding the ripple effects on the industry.”

Stephen Innes, managing partner at SPI Asset Management, described the tariffs as a significant threat to global supply chains. “A 25% blanket tariff on imported vehicles isn’t just a trade policy shift; it’s a seismic shock for inflation and supply chains,” he said.

A Permanent Trade Policy Shift?

Trump suggested that the tariffs will be a long-term measure, unlike previous levies on Mexico and Canada that faced delays. He maintained that the scheduled April 2 deadline is firm unless trading partners offer substantial concessions.

“I’m open to negotiations,” Trump said, “but only if they’re willing to give us something of great value.”

As investors await further details on the tariffs, market volatility is expected to persist, with implications likely to ripple across industries and global trade.