WSJ What’s News - Auto Stocks Drop as Trump Plans 25% Tariff on Car Imports

Episode Date: March 27, 2025

A.M. Edition for Mar. 27. Shares in global carmakers are sliding after President Trump said he’d impose a new duty on automotive imports starting next week. European autos reporter Stephen Wilmot discusses how that move could affect car prices and demand. Plus, leaders meet in Paris to plan for a European armed force in Ukraine to implement a potential ceasefire with Russia. And the WSJ’s Stu Woo on how the used phone market is taking off, as shoppers - feeling ripped off by $1,000 devices - hunt for cheaper alternatives. Luke Vargas hosts. Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

With the Fizz loyalty program, you get rewarded just for having a mobile plan. You know, for texting and stuff. And if you're not getting rewards like extra data and dollars off with your mobile plan, you're not with Fizz. Switch today. Conditions apply. Details at fizz.ca. President Trump makes good on his pledge to penalize foreign carmakers, announcing plans for 25 percent tariffs on global imports.

Plus, European leaders move to build a Ukraine support force without the U.S. and the used phone market takes off. If you buy a secondhand phone, you pay a third of the price, maybe half the price for a phone that's pretty similar to a brand new one. It's Thursday, March 27th. I'm Luke Vargas for The Wall Street Journal, and here is the AM edition of What's News, the top headlines and business stories moving your world today. Global reaction is pouring in after President Trump yesterday evening announced that the

U.S. would impose 25 percent tariffs on all automotive imports starting April 3rd. The announcement appeared to dispel any chance of an exemption for countries like Mexico and Canada which have a free trade agreement with the U.S. and would be added on top of 25 percent tariffs on goods from those countries that Trump had already imposed. Canadian Prime Minister Mark Carney was quick to respond, invoking the interests of the country's unionized auto workers and its bilateral trade with the U.S. This is a direct attack to be clear, a direct attack on the very

workers that I stood in front of, uniformed workers I stood in front of this morning in front of uniformed workers. I stood in front of this morning at the Ambassador Bridge. A bridge is a symbol and a reality up until now of the tight ties between our two countries, ties of kinship, ties of commerce, ties that are in the process of being broken. — Carney pledged to respond to the U.S. tariffs, but said he'd first wait to see the details of Trump's executive order. The province of Ontario is home to the bulk of Canada's auto industry, and its premier said yesterday that car plants on both sides of the border would shut if Trump's plans went ahead.

Meanwhile, we've yet to hear a response from Mexico, the biggest auto exporter to the U. The country sends a number of popular vehicles north of the border, including GM, Ram and Toyota pickups, luxury models from BMW and Audi, and affordable sedans from Nissan, though industry officials are warning that the tariffs could trigger price hikes that put vehicles further out of reach for Americans after sizable cost increases since the pandemic. Glenn Stevens Jr. is the executive director of Mish Auto, a business group that represents Michigan's auto sector. What we're concerned about is the average transaction price of a vehicle is already

at around $49,000, near an all-time high. So incremental or even major shifts in that pricing is going to affect demand and that's a concern of us because that has a backward push on the supply chain with regards to production cuts and maybe employment cuts. So what reaction are we seeing from automakers beyond North America and how are major players in the industry responding? For more, I'm joined by Journal European Autos reporter Stephen Wilmot. Stephen, first, what has the broad reaction been to this from a sector that has very much been in Trump's crosshairs since even before he took office?

Were there any details of what was announced yesterday that have caught folks off guard? Well, I think this really was about the worst case scenario for global automakers and the US trading partners. So we have seen quite a strong negative share price reaction. The German players are down four to 5% in Europe this morning. That followed falls on Asian stock markets.

The worst affected was Hyundai, which isn't surprising because it's actually one of the companies that ships most to the US. It always used to be Japan that was number two, but South Korea has taken it over. And one of the reasons for that is, well, Hyundai and Kia have been extremely successful in the US. And because their success is relatively recent, they haven't localised as much of their production as the Japanese players who are more mature in the market.

Japanese carmakers also falling today. And unsurprisingly, Japan's Prime Minister shot back pretty quickly to Trump's announcement, adding that Tokyo will be looking at all options as it decides how to respond. The European Commission president also saying that the bloc would safeguard its economic interests. Where is all of this leading? Well, absolutely there could be retaliatory tariffs.

The US's trading partners haven't yet said what they might be, but they're saying they're preparing things. So we're likely to see some kind of tit for tat response. The share price reactions do show some kind of skepticism on the part of investors that this is for real. For example, UBS was estimating recently that the German automakers' profits could be impacted by 10 to 20 percent. Well, we haven't seen their share prices fall by that amount, right? Though a concern for the automakers in the long term is, let's say if tariffs lead the whole automotive supply chain to get more expensive, that could weigh on demand, which

is obviously a massive long-term risk. Absolutely. I mean, they have the choice to put prices up to keep their margins, but that has an impact on demand. Analysts are sort of saying anything between five and ten thousand dollars could be added to the price of a car. Clearly, car makers could choose to absorb the tariff hit to some extent. BMW is one of the car makers has been most transparent about this so far. It said that it will maintain its prices in the US until early May and then it will reconsider. So there are short term responses and long

term responses in this. The president of the United Auto Workers Union, Sean Fain, who's very enthusiastic about Trump's move here saying that the tariffs were quote, a major step in the right direction for auto workers and blue collar communities. What of that? How widespread is that sentiment? And is there a sense that this US trade policy could have a positive effect on American manufacturing in the long run? Yeah, it's fair to say that the UAW has been one of the most consistent voices in favour of President Trump's tariff policy, despite the historic alignment of the UAW with the

Democratic Party. And that reflects a very long held belief in trade union circles in Michigan that the North American free trade agreements have been bad for US auto workers. Pretty much everyone else points more to the added costs that you get with tariffs. But there is a grain of truth in what Trump has said that the offshorings stopped during his first term and you got more factory investments since that there is some nuance in there because the shift to electric vehicles have also triggered a wave of investments. So Mercedes-Benz has, for example, invested a lot in Tuscaloosa, BMW in Spartanburg, Hyundai. As they've been successful in the US, they've been on-shoring

more and more of their production. They still import a lot and that's the big problem for them. And Trump's tariff policy could accelerate some of those investments and we could see further announcements in that vein. That was journal European autos reporter Stephen Wilmot. Stephen, thank you so much for stopping by. Thank you. And coming up, a coalition of the willing gathers in Paris in order to put boots on the ground in Ukraine. We've got that story and much more after the break. Turn it up in gas mode. Or get the best of both in hybrid mode. Choose how you move in the all-in-one Escape. And right now, get a $3,000 rebate on the Escape Plug-in Hybrid and all 2025 Escape models.

For details, visit your Toronto area Ford store or ford.ca. Military delegations from some 30 nations are in Paris today to discuss plans for a European armed force that could be deployed to Ukraine to implement a potential ceasefire with Russia. French President Emmanuel Macron and UK Prime Minister Keir Starmer have been leading efforts to build a so-called Coalition of the willing to put boots on the ground. And head of the summit, Macron, said the force could respond if Russia launched an attack. So we are not on the front lines. We don't go to the fight.

But we are there to guarantee a lasting peace. It's a pacifist approach. And the only ones who would, at the moment, trigger a conflict about the coast's situation would be the Russians, if they decided again to launch an aggression. The U.S. is notably absent from the Paris talks, with Trump's special envoy Steve Witkoff dismissing the idea of a European deployment or even the need for it. Earlier this week, the White House said it had reached an agreement between Russia and Ukraine to eliminate the use of force in the Black Sea, which came after Russian President

Vladimir Putin agreed to end attacks on energy infrastructure. However, President Trump said Russia appeared to be slow-walking negotiations on an unconditional ceasefire, with Moscow trying to extract further concessions from the West. Brazil's Supreme Court has ordered former President Jair Bolsonaro to go on trial for an alleged plot to overturn his 2022 election laws. In a blow to one of President Trump's closest allies in Latin America, the justices ruled that Bolsonaro should stand trial on five charges, including planning a coup and running an armed criminal organization.

In a post on X, the right-wing leader said the court was trying to lock him up ahead of elections planned for October 2026, with some recent polls showing Bolsonaro would narrowly win the election against President Lula da Silva. An appeals court has dealt a setback to the Trump administration's bid to restart deportation flights of alleged Venezuelan gang members using 1798's Alien Enemies Act. The law allows a president to deport citizens of countries considered U.S. enemies. However, lawyers successfully argued that deportees weren't given a fair chance to contest their membership in the Tren de Aragua gang, a recently designated foreign terrorist organization, leading a U.S. district judge to block deportation flights earlier this month.

In its two-to-one decision yesterday, the U.S. Court of Appeals for the D.C. Circuit upheld that block, with a judge saying the administration hadn't shown it was likely to prevail. The U.S. government will probably run out of money to pay its bills by August or September. That's the first official estimate provided by the Congressional Budget Office of the so-called ex-state that will require lawmakers to raise the federal debt limit, though the CBO added that significantly weaker revenue collection could push up the ex-state to before a mid-June tax payment deadline. The projection puts lawmakers on the clock to figure out how and when to raise the debt limit, and the forecast

for August or September gives them time to combine it with a major tax and spending bill that's still taking shape. And finally, the used phone market is taking off as shoppers feeling ripped off by thousand-dollar devices hunt for cheaper alternatives. More than 208 million used phones were sold worldwide in 2024, according to market research company IDC, up 6.4% from a year earlier. And while most buyers do still want a new device, tech reporter Stu Wu explains why more are looking to secondary markets. Apple and Samsung release these new phones every year and people are thinking, oh, you

know, these new updates are pretty marginal. I can't really tell the difference between this phone and one that's one or two years old. If you buy a secondhand phone, you pay a third of the price, maybe half the price. For a phone that's pretty similar to a brand new one. And then I think the other thing is phones are just flat out lasting longer.

So you can actually hold on to your phones for three, four, five years and they'll survive. And Stu told us that used or refurbished devices are so popular, Apple and Samsung are getting into the market themselves. Well, it just gives them more options to sell things. Apple would rather have them by used Apple phone rather than a used phone from Samsung or everybody else. So it's just keeping them in the ecosystem. If you're a phone carrier, you want to offer a re-furbished phone maybe to lure someone from a different carrier at a want to offer a rebirth rubbish phone maybe to lure someone

from a different carrier at a cheaper price. So that just gives you more options to try to win over a customer or retain a customer. And that's it for What's News for this Thursday morning. Today's episode was produced by Daniel Bach with supervising producer Sandra Kilhoff, and I'm Luke Vargas for the Wall Street Journal. We will be back tonight with a new show. Until then, thanks for listening.