25% tariff deal catastrophic blow to US automotive stocks, North American supply chain collectively under pressure.

Due to President Trump's promise to impose a 25% tariff on products imported from Canada and Mexico, the market of American Financial Group, Inc. was thrown into turmoil, with automotive stocks, suppliers, and related industry stocks closing weakly on Monday. President Trump announced at a press conference, "Tomorrow we will impose a 25% tariff on Canada and Mexico," adding that there was "no room" for an agreement before the midnight deadline. This long-standing tariff policy commitment will be the most extensive during the Trump administration, affecting approximately $1.5 trillion in annual imports into the United States. All goods imported from Canada and Mexico will be subject to a 25% tariff, with the only exception being Canadian energy products with a 10% tariff rate. Additionally, Trump also announced that tariffs on Chinese imports would double to 20%. His remarks sent shockwaves through the already tariff-sensitive market, causing the Dow Jones index to fall by 650 points, with shares of Detroit's Big ThreeGeneral Motors Company (GM.US), Ford (F.US), Stellantis (STLA.US), and Tesla, Inc. (TSLA.US) all seeing significant declines at the close. It wasn't just automakers that were impacted. Suppliers such as Aptiv (APTV.US), Lear Corp (LEA.US), BorgWarner (BWA.US), Magna International (MGA.US), and Autoliv (ALV.US) were also under significant selling pressure. Dana Incorporated (DAN.US), which manufactures transmissions, drivelines, and motion systems for Ford and Stellantis, as well as components for the mining and construction industries, saw its stock fall by about 5% to a six-week low. Shares of Adient plc (ADNT.US), which produces seats and interior components, fell by nearly 7%, while Canada's largest tire manufacturer, Goodyear Tire & Rubber Company, headquartered in Ohio, saw a 6.5% drop in its stock price. The knee-jerk reaction to President Trump's remarks highlights Wall Street's sensitivity to the impact of tariffs. Data shows that most cars in the United States are domestically produced, with only 16% produced in Mexico, slightly higher than the 7% produced in Canada. However, imposing a 25% tariff on imports from these countries (as well as parts imported from outside the US) will likely result in an average increase of $6250 in car costs, a burden that manufacturers and consumers are likely to share. Both Mexico and Canada have vowed to take retaliatory measures against US tariffs.