• Auto stocks including General Motors and Stellantis tumbled as manufacturers awaited President Trump’s latest tariff announcement on Wednesday. The Dow Jones U.S. auto manufacturers index dropped 5% while Elon Musk’s Tesla was down 5.6%. Industry estimates pegged the price increases as high as $10,000 due to the impact from the levies. 

President Trump pushed ahead with new tariffs on foreign-made cars and light trucks of 25%, he announced from the Oval Office on Wednesday. The new tariffs will launch on April 2 “and we’ll start collecting on April 3,” said Trump, adding the levies would not hit cars built in the U.S. 

“This is going to lead to the construction of a lot of plants, in this case, a lot of auto plants,” said Trump during the press conference. Trump said he expected the tariffs would fuel an increase in auto manufacturing in the U.S. that would push consumer prices down. He also suggested the White House might move ahead with plans to allow consumers to deduct interest payments on auto loans from tax bills if the car is manufactured in the U.S.

“I think our automobile business will flourish like it’s never flourished before,” said Trump. He said “very strong” policing would go along with the 25% auto tariffs. “This is permanent. 100%,” said Trump.

The tariffs were initially set to take effect on March 4, but Trump later announced adjustments on imports from Canada and Mexico to lessen the squeeze on American automotive manufacturers and give them time to prepare. The administration had imposed 25% import levies on goods from Canada and Mexico but allowed the pause for cars and goods traded through the North American USMCA trade agreement. Trump then set a deadline of April 2 for announcing additional reciprocal tariffs and tariffs on cars imported into the U.S., but he reversed course and dropped the tariff announcement a week early. 

The one-month grace period on the 25% tariffs on cars and car parts came after Trump talked to representatives from Ford, General Motors, and Stellantis. Trump also expanded the grace period for other goods from Mexico and Canada. At the time, Trump told companies to “start investing, start moving, shift production here.”

However, experts have said that extending tariffs to auto parts with steel and aluminum will lead to hefty costs for consumers, auto manufacturers and their suppliers. Furthermore, adjusting a manufacturing supply chain often takes years, not weeks, experts have said. Roughly one in five cars and trucks sold in the U.S. were built in Canada or Mexico, the Associated Press reported. In 2024, the U.S. imported $79 billion worth of vehicles from Mexico and $31 billion more from Canada. As for auto parts, $81 billion worth of imports originated in Mexico and $19 billion from Canada. 

“The tariffs announced today will harm — not help — the US auto industry, endanger many American jobs, and lead to a hollowing out of auto manufacturing in the United States,” John Murphy, Senior Vice President at the U.S. Chamber of Commerce, told Fortune. “These auto tariffs come on top of tariffs on steel, aluminum, and goods from Canada and Mexico.  With additional reciprocal tariffs expected on April 2, the stacked tariffs on the auto sector are formidable.”

Ken Kim, a senior economist at KPMG, wrote in a Wednesday note that orders for vehicles and parts had jumped 4% in February, the most significant rise in three years. The rise was due to front running in the auto industry to lock in prices before the tariffs could take effect. Industry estimates pegged the price increase on new vehicles in a range from about $2,000 to $10,000 or more, which would represent a 20% increase on the average transaction price of $48,500, Kim wrote. 

“Consumers are already reeling from elevated inflation,” Kim wrote. “Talk about sticker shock.”

Overall, spending dropped 0.3% in February, the most meaningful decline in seven months, according to Kim, and it’s due to the uncertain economic outlook. 

“The drop could be an early indication that business leaders are pulling back on future capital spending due to the uncertain tariff environment.

According to Scott Lincicome, vice president of general economics at the libertarian think tank Cato Institute, automotive tariffs would not only raise prices on cars, but they would hurt U.S. based automakers. It’s long been acknowledged by auto industry experts that free trade and investment have fueled growth and stability of the auto industry since the 1990s, he wrote. 

“This is why, when Trump threatened new tariffs on automotive goods in 2018, basically every major U.S. business group—the Alliance of Automobile Manufacturers (which includes Detroit automakers), the Association of Global Automakers, the Motor and Equipment Manufacturers Association, the National Association of Manufacturers, the U.S. Chamber of Commerce, and the Business Roundtable—opposed them, as did all the automakers located here.”

This story was originally featured on Fortune.com

• Consumer confidence fell for the fourth consecutive month, and consumers’ outlook on business conditions and their own income fell to the lowest level in 12 years. The Conference Board says confidence has fallen “well below the threshold…that usually signals a recession ahead.”

The Conference Board released its latest Consumer Confidence Survey on Tuesday, which revealed consumer confidence fell for the fourth consecutive month.

Notably, the Conference Board’s Expectations Index—which is based on consumers’ short-term outlook for income, business, and labor market conditions—fell to 65.2, the lowest level in 12 years “and well below the threshold of 80 that usually signals a recession ahead.”

“Consumers’ expectations were especially gloomy, with pessimism about future business conditions deepening and confidence about future employment prospects falling to a 12-year low,” Stephanie Guichard, senior economist of global indicators at the Conference Board, wrote in a statement. “Meanwhile, consumers’ optimism about future income—which had held up quite strongly in the past few months—largely vanished, suggesting worries about the economy and labor market have started to spread into consumers’ assessments of their personal situations.”

Compared to February, fewer consumers in March expected their incomes to increase—and conversely, more people expected their income to actually decrease going forward. Their outlook for the labor market at large also deteriorated, with fewer people expecting more jobs to be available and more people expecting business conditions to worsen.

“Comments on the current administration and its policies, both positive and negative, dominated consumers’ write-in responses on what is affecting their views of the economy,” the Conference Board said. 

March’s big drop in consumer confidence was driven largely by people over 55 years old, followed by those between 35 and 55.

Notably, this pessimism extended to the stock market, where expectations turned negative for the first time since 2023. Markets experienced a massive selloff earlier this month amid tariff uncertainty, which erased all of the S&P 500’s post-election gains.

“In March, only 37.4% expected stock prices to rise over the year ahead—down nearly 10 percentage points from February and 20 percentage points from the high reached in November 2024,” Guichard said. For what it’s worth, what consumers are experiencing appears to match the sentiment on Wall Street, where many economists expecting the Trump administration to pursue “an exceptionally pro-growth agenda” are now feeling distressed amid the heightened risks of a recession.

Consumers are also more worried about inflation than they were in February, remaining particularly “concerned about high prices for key household staples like eggs and the impact of tariffs.” The Commerce Department in February said Americans sharply cut back on spending amid concerns about tariffs’ effects on the economy. On Wednesday, Chicago Fed President Austan Goolsbee warned that inflation will be a self-fulfilling prophecy if businesses start baking consumers’ fears into their own forecasts.

The Conference Board will release its next report on consumer confidence on April 29.

This story was originally featured on Fortune.com

Olympus Partners has $4 billion to invest after the middle market private equity firm wrapped up fundraising for its latest flagship fund. The firm said Wednesday that its eighth pool came in at $3.5 billion, and jumped to $4 billion with the inclusion of coinvestments from its LPs and expected reinvestments, according to a March 26 letter to Olympus investors. Olympus had set a $4 billion hard cap for Fund VIII, the maximum the fund was permitted to raise from investors.

Olympus spent roughly a year marketing for its eighth pool, which raised 15% more than its prior fund. Olympus Growth Fund VII collected $3.04 billion in late 2017.

Earlier this month, Fortune reported that Olympus fund VIII had raised $2.87 billion.

Olympus is the PE firm from Chairman and CEO Rob Morris, who is also its founder. The firm invests in business services, food services, consumer products, healthcare services, financial services, industrial services and manufacturing. Since launching in 1988, Olympus has raised $12 billion in capital. The firm has also returned $6 billion to investors over the past three years, including $3 billion in 2024, Fortune has reported.

Morris, in the letter, discussed the tariff-driven policy of the Trump administration, which has caused rampant stock market volatility, and fears of a recession. Morris said private equity managers should do their best to avoid the “incoming missiles” of tariffs. For businesses with a supply chain heavily dependent on tariff targets, he advised diversifying to safer geographies or pursuing tariff exempted alternatives. “There are many other tactical moves, but no foolproof plan to completely avoid the economic storm a trade war could ignite,” Morris wrote in the letter.

Fund VIII began investing in January and has so far completed two transactions. In January, Olympus acquired Accelevation, a provider of infrastructure products and services to the data center market, for $455 million. The PE firm also scooped up generic drug maker PAI Pharma for $605 million in February.  The deals were “the fastest Olympus has purchased two investments at the advent of a Fund,” according to the letter.

This story was originally featured on Fortune.com

Source link