Trump tariff fears cause decline in foreign automaker stocks.

• On Wednesday, the stock prices of foreign automakers plummeted due to fears that President-elect Trump may impose higher tariffs on imported vehicles in the U.S.
• Trump frequently stated that he plans to raise tariffs on imported vehicles from China, Europe, and Mexico, where numerous automakers have set up production facilities.
• While many major automakers have factories in the U.S., they still heavily rely on imports from other countries, such as Mexico, to meet U.S. consumer demand.

On Wednesday, the stock prices of foreign automakers, including Chinese and German manufacturers, dropped significantly due to worries that the U.S. may increase tariffs on imported vehicles under President-elect Donald Trump.

The European-traded shares of and dropped approximately 6.5%, while fell by 4.9% and declined 4.3%. Additionally, U.S.-traded Chinese automakers such as , and experienced a decline of between 2% and 5% during intraday trading on Wednesday.

Trump has consistently stated that he plans to raise tariffs on numerous products, including vehicles from China, Europe, and Mexico, where many automakers, including Europeans, have set up production facilities.

Japanese automakers' U.S.-traded shares were down by roughly 1% and 9% during intraday trading, while over-the-counter shares of were off by 3%. Both companies reported declines in quarterly earnings earlier in the day.

During his campaign, Trump announced plans to impose a more than 200% duty or tax on imported vehicles from Mexico. He also threatened to increase tariffs on European vehicles, as he had done during his first term in office.

If there are increases in tariffs, Honda Executive Vice President Shinji Aoyama warned that the company's operations will face increased costs. He stated that Honda manufactures approximately 200,000 vehicles annually in Mexico and exports about 160,000 of those to the U.S.

"He stated that the financial results of the company had a significant impact, saying, "It's not just Honda. All companies are facing the same situation. In brief, I don't believe the tariff will be imposed soon.""

Aoyama later suggested the possibility of producing elsewhere to avoid U.S. tariffs.

While many major automakers have factories in the U.S., they still heavily rely on imports from other countries, such as Mexico, to meet U.S. consumer demand.

In addition to Chrysler, other automakers such as Toyota, Honda, Kia, Mazda, and others also have plants in Mexico.

Since the North American Free Trade deal and the USMCA, automakers have increasingly turned to Mexico as a more cost-effective location for vehicle production compared to the U.S. or Canada.

Both Trump and Democrats agreed that the trade deal Trump negotiated during his first term should be modified to address potential plans by Chinese manufacturers to set up auto factories in Mexico and export vehicles to the U.S.

"Trump announced on Tuesday evening that he plans to impose a 200% tariff on cars made in Mexico, rendering them unsellable in the United States."

Trump's plans for an up to 25% tariff on imported vehicles to the U.S. did not come to fruition, leading Wall Street analysts to speculate that such tariffs could be hyperbole.

Emmanuel Rosner, a Wolfe analyst, stated on Wednesday that while there is no expectation of aggressive new tariffs in a possible Trump Administration, the challenge for investors will be around rhetoric, particularly with the USMCA up for renegotiation in 2026. Trade uncertainty could weigh on Auto stocks broadly, as seen during the height of the US-China trade war and NAFTA negotiations from 2018 to early 2020.

John Murphy of BofA expects a stricter stance on trade and tariffs, but believes that policy changes will be less severe than previously announced to minimize disruption to businesses.

— CNBC's Michael Bloom contributed to this report.