Tesla shares dropped 6% amid a broad sell-off on Wednesday prior to President Donald Trump signing an order to implement a 25% tariff on auto imports, which came after the market close.
Investors started preparing during regular trading hours. After wavering earlier in the day, the market moved sharply lower following the news of the announcement. Tesla shares tumbled, and the unexpected tariff update jolted other car makers.
While Ford and General Motors were sharply lower, tech shares also took a hit, amid the expectation that more cautious corporate activity and investment will eventually erode earnings growth market-wide.
Here's where major US indexes ended the day. The Magnificent 7 were among the market's biggest losers.
In a press conference held after market close, Trump said a new 25% tariff would apply to all cars and light trucks not made in the US.
"So we'll effectively be charging a 25% tariff, but if you build your car in the United States, there's no tariff," Trump said. The president suggested the new tariff could stimulate manufacturing growth in the United States if foreign-owned auto companies expand or create new plants in the country to circumvent the import fees.
"A lot of foreign car companies are going to be in great shape because they've already built their plant, but their plants are underutilized, so they'll be able to expand them inexpensively and quickly," Trump said. "Others will come into our country and build, and they're already looking for sites."
Trump said he did not consult Tesla CEO Elon Musk about the tariff because Musk "may have a conflict" when offering advice on the subject.
"Elon's amazing; he's never asked me for a favor in business whatsoever," Trump said. "I've never had Elon say, 'Would you do me a favor with the electric mandate or anything?' He's never asking for anything."
The auto tariff comes in addition to other duties imposed on goods and materials like steel and aluminum imported from Canada, Mexico, and China. Trump has repeatedly extended the deadlines for the international tariffs to take effect, and then walked the extensions back during trade negotiations, increasing tension between the US and its allies to the North and South.
The escalating trade tensions have shaken the stock market in recent weeks, with Trump's auto tariff announcement sending shares tumbling once again.
Artificial intelligence giant Nvidia had already dropped earlier in the day and ended lower by about 6% following a report that it could face fresh regulatory hurdles in China, which accounts for 13% of its annual sales. Beijing is reportedly tightening chip energy standards , and these new rules would exclude Nvidia's best-selling processor.
Wednesday's tumble snapped a three-day wining streak for the S&P 500 . The benchmark index rallied in recent days amid a softening of Trump's reciprocal tariff policy, which is scheduled to kick in on April 2.
Here's where the market's top tech names stood at the 4:00 p.m. ET closing bell on Wednesday:
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