Trump Slams On The Auto Tariff Brakes

President Trump's Wednesday night announcement of a 25% tariff on imports of foreign motor vehicles caused a selloff in auto stocks today. Components such as engines and transmissions are also impacted, while previously trade-compliant parts from Canada and Mexico will be slapped with tariffs at a later date. 

At the moment, the 25% tariff is expected to be on top of those coming on April 2. That would put cumulative tariff rates as high as 50% for imported autos. Demand for used cars is likely to surge as tariffs make new cars less affordable, which will likely boost consumer inflation (chart). Higher auto prices would depress consumer spending on autos.