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The 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.
- There is a strong interdependence between the automotive industries in Canada, the United States, and Mexico. Tesla cars, although assembled in America, include 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.
Tesla’s shares fell 5.2% on Monday, marking the greatest decline among the Magnificent Seven. Apple (AAPL), the Dow Jones Industrial Average’s worst performing company, fell by 3.2%. Nvidia (NVDA) slipped 2.8%. Microsoft (MSFT), Alphabet’s (GOOGL) (GOOGL) Amazon (AMZN), as well as Alphabet, lost some ground. Meta Platforms stock (META) 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. Tariffs against Canadian and Chinese imports are set to go into effect on Tuesday morning. Trump postponed the tax on Mexican goods for one month on Monday after reaching an accord with Mexican president Claudia Sheinbaum on border enforcement between the U.S. and Mexico.
After the U.S. Mexico agreement was announced, stocks opened with a sharp drop on Monday.
U.S. Auto Industry and Trump Allies could face Retaliation
In North American negotiations, the automotive industry often becomes a flashpoint. U.S. auto companies such as General Motors (GM), Ford (F), and others rely on Canadian and Mexican assembly and parts lines. Tesla’s vehicles are assembled and sold within the United States, yet they use parts manufactured across northern and southern border.
Elon Musk is a close friend of President Trump and his relationship with him has been beneficial to Tesla’s stock price since November’s presidential election. His proximity to Trump may also be a factor in Monday’s drop. Canada’s plans to impose a 25% tariff on U.S. products are retaliatory, however some officials advocated measures directly targeting the president and his allies.
Chrystia freeland, former Canadian finance minister suggested at the weekend that Tesla’s vehicles should be subject to a 100 percent tariff. Ontario Premier Doug Ford has canceled StarLink’s contract in the province with Musk. Saturday, British Columbia’s leader ordered provincial liquor control authorities to cease purchasing liquor from Republican states.
Apple and Nvidia Still Under Pressure
Apple stock was under pressure due to impending tariffs in China, where it has its largest assembly centers. Apple iPhones were exempted from tariffs during the first Trump Administration, but on Monday it wasn’t clear if the treatment would be the same.
Nvidia shares were also down on Monday. But lingering worries about Trump’s proposed tariffs likely had more to do with the decline than Trump himself. Nvidia’s stock dropped last week, as Wall Street reacted to a highly efficient AI model developed by Chinese startup DeepSeek. This Chinese start-up’s AI model can match performance levels of expensive U.S. versions at a fractional cost, raising concerns over the viability of AI infrastructure expenditures that are fueling Nvidia stocks record rise.
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