Tesla shares plunged by more than 5% on Monday, as did other automakers’ stock, due to President Donald Trump implementing new tariffs.
Trump’s 25% tariffs for Canada and Mexico, which went into effect February 1, caused stock market volatility as automakers with manufacturing plants in Mexico, like Toyota (-5.08%), Honda (-4.99%) and Nissan (-3.03), saw their stock prices decrease.
Stellantis N.V., maker of Chrysler, Ram and Jeep, shares were down by 3.81% for the session after initially dropping nearly 6.8%. General Motors‘ shares dropped by 3.15%, nearly 2% lower than Friday’s close.
Mexico’s Secretary of Economy Marcelo Ebrard dispelled rumors that the company would move its business back to the U.S. to avoid Trump’s tariffs.
Analysts said GM, Ford and Volkswagen will be impacted the most by Trump’s tariffs as they make the majority of their vehicles in Mexico or Canada, reported Fortune.
Nissan made 20% of its global production in Mexico in 2023 and accounted for 16.8% of the country’s total light car production in 2024, reported Statista.
The decline for automakers’ stocks subsided before noon after Trump announced a 30-day postponement on the tax increase for Mexico.
In exchange, Mexico’s President Claudia Sheinbaum announced that she would deploy over 10,000 soldiers to the country’s northern border to help fight drug trafficking.
Sheinbaum said she had a “good conversation” with Trump, where they discussed security and trade. Trump confirmed the temporary negotiations via a post on Truth Social.
“We further agreed to immediately pause the anticipated tariffs for a one month period during which we will have negotiations headed by Secretary of State Marco Rubio, Secretary of Treasury Scott Bessent, and Secretary of Commerce Howard Lutnick, and high-level Representatives of Mexico,” Trump said.
Trump said the Mexican troops will also help deter illegal immigration into the U.S as well as crack down on the illegal drug trade.
“These soldiers will be specifically designated to stop the flow of fentanyl, and illegal migrants into our country,” he said.
The postponement gave automakers a temporary reprieve as the majority of car companies’ operations involve a North American supply chain, reported Fortune.
Canada’s 25% tariff is scheduled to start Tuesday, along with China’s 10% tariff.
