Yahoo Finance

Key Takeaways

• Tesla was the worst-performing Magnificent Seven stock on Monday, falling more than 5%, after President Trump moved to impose stiff tariffs on America's largest trading partners.

• The automotive industries of the U.S., Canada, and Mexico, are deeply intertwined; Tesla vehicles, despite being assembled in the U.S., contain parts from Canada and Mexico.

• Some Canadian officials have proposed directing retaliation at President Trump and his allies, including Tesla's CEO Elon Musk and Republican-led states.

Tesla (TSLA) was one of the worst-performing stocks in the S&P 500 on Monday after President Trump went through with a plan to impose sweeping tariffs on America’s largest trading partners.

Shares of Tesla closed 5.2% lower, posting the largest decline of the Magnificent Seven stocks on Monday. It was followed by Apple (AAPL), which fell 3.2% and was the worst-performing stock in the Dow Jones Industrial Average, and Nvidia (NVDA), which slipped 2.8%. Microsoft (MSFT), Alphabet (GOOG)(GOOGL) and Amazon (AMZN) also lost ground, while Meta Platforms (META) stock rose 1.2%.

Trump over the weekend signed an executive order imposing a 25% tariff on Canadian and Mexican goods—except for Canadian oil, which will be taxed at 10%—and a 10% tariff on Chinese imports. The tariffs on Canadian and Chinese goods are scheduled to take effect early Tuesday morning. Trump on Monday delayed the levy on Mexican goods by one month after reaching an agreement on U.S.-Mexico border enforcement with Mexican President Claudia Sheinbaum.

Stocks opened sharply lower on Monday morning, before paring most of those losses after the announcement of the U.S.-Mexico deal.

U.S. Auto Industry, Trump Allies May Face Retaliation

The automotive industry is a recurring flashpoint in North American trade negotiations. U.S. car companies like General Motors (GM) and Ford (F) rely heavily on Canadian and Mexican parts manufacturers and assembly lines. All Tesla vehicles sold in the U.S. are assembled in the U.S., but they contain parts made across the northern and southern borders.

Tesla CEO Elon Musk’s closeness to President Trump, which has been a boon to the stock since the election in November, may have also played a role in Monday’s selloff. Canada has laid out plans for a 25% retaliatory tariff on all U.S. goods, but some officials have advocated for measures that directly target the President and his allies.

Former Canadian finance minister Chrystia Freeland over the weekend suggested slapping a 100% tariff on Tesla vehicles. Ontario Premier Doug Ford on Monday canceled the province’s contract with Musk’s satellite company StarLink. The leader of British Columbia on Saturday ordered the provincial liquor control authority to stop purchasing liquor from Republican-led states.