NEW YORK (AP) — U.S. stock indexes are falling Thursday following President Donald Trump’s latest tariff escalation.
The S&P 500 was down 0.5% in early trading. The Dow Jones Industrial Average was down 221 points, or 0.5%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 0.6% lower.
General Motors helped lead the way with a drop of 9.1% after Trump announced 25% tariffs on imported cars. Ford Motor held up better and was down 0.8%.
Even U.S. automakers can feel the pain of such tariffs because their supply chains are spread throughout North America. Trump, in turn, says he wants production of autos to take place within the United States.
“There are still a lot of unknowns, but if this remains in place, there will clearly be some pain for the companies to digest,” according to UBS analyst Joseph Spak.
Among the uncertainties are how the U.S. government will determine how to apply tariffs to parts that are compliant with the free-trade agreement that the United States and Mexico and Canada have, but are not made in the United States. Tracking such parts could be difficult, Spak said.
Automakers based outside the United States also sank. In Tokyo, Honda Motor fell 2.5%, and Toyota Motor lost 2%. In Seoul, Hyundai Motor dropped 4.3%.
Electric-vehicle makers Tesla and Rivian held up better, though. They look to face less pressure from Trump’s tariffs, and Elon Musk’s Tesla rose 0.9%, while Rivian gained 2.9%.
Expectations are high for stock markets worldwide to remain shaky as an April 2 deadline approaches for tariffs. That’s what Trump has called “Liberation Day,” when he will roll out tariffs tailored to the United States’ trading partners. In each case, he said the “reciprocal” tariff will match the burden the other country places on the United States, including things like value-added taxes.
Hopes are still high that Trump may ultimately opt for more targeted or less intense tariffs that are less painful for the global economy than feared. But even if he does, all the talk about tariffs has already made U.S. consumers and businesses feel more cautious and pessimistic. If such sour moods convinces them to pull back on their spending, it could hurt the economy.
So far, the economy has seemed to be holding up.
One report on Thursday said slightly fewer workers applied for unemployment benefits last week than economists expected. It’s the latest hopeful sign for a job market that may be settling into a “low hire, low fire” state.
A second report said the U.S. economy’s growth during the final three months of last year was slightly stronger than earlier estimated.
The better-than-expected data helped Treasury yields in the bond market remain relatively steady. The yield on the 10-year Treasury edged up to 4.36% from 4.35% late Wednesday.
On Wall Street, Petco Health & Wellness jumped 31.1% after the retailer reported slightly stronger results for the latest quarter than analysts expected.
In stock markets abroad, indexes fell across much of Europe after finishing mixed in Asia.
Japan’s Nikkei 225 fell 0.6% following the losses for many of its automakers, and Japanese Prime Minister Shigeru Ishiba said Thursday, “We strongly request that tariff measures not be applied to Japan.”
In China, stocks rose 0.1% in Shanghai and 0.4% in Hong Kong.
Chinese automakers and parts manufacturers have been expanding sales around the world, but not in the United States, so any impact from the tariffs announcement would be an indirect one.
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AP Business Writers Yuri Kageyama and Matt Ott and AP Videographer Ayaka McGill contributed.