The Dow Jones industrial index fell by 0.4 percent, the broad S&P 500 index by 0.3 percent, and the technology-heavy Nasdaq composite index by 0.5 percent.
The American car giants fell after the US President Donald Trump, after the stock market closed on Wednesday, clarified that 25-percent tariffs would be imposed on all vehicles and vehicle components manufactured outside the US.
At the close of Wall Street, General Motors had fallen by 7.4 percent, Ford by 3.9 percent, and Stellantis by 4.2 percent.
The declines came after foreign car stocks around the world also plummeted.
Higher inflation
Electric car manufacturer Tesla, with Trump's associate Elon Musk as CEO, rose by 0.4 percent instead. Tesla has a relatively large share of its production within the US.
According to the major bank JP Morgan, 82 percent of Ford's sales in the US are produced domestically. The corresponding shares for Stellantis and General Motors are 71 and 53 percent, respectively, writes AFP.
The new vehicle tariffs are set to take effect on April 3 and May 3, respectively. Canada and the EU are now considering possible responses.
Trump has publicly announced, withdrawn, put on hold, or postponed a long series of tariffs against various industries. Negotiations are ongoing – but concern is growing for a global trade war.
The twists have reduced investors' willingness to buy, as it is difficult to price risk.
The President's policy is also fueling existing concerns about a weakening labor market, deteriorating growth, and that the tariffs will lead to rising inflation.
Very uncertain
The persistent hope that the central bank Federal Reserve (Fed) will lower interest rates – and thereby make risk capital cheaper – is simmering in the background.
But the Fed has so far prioritized getting closer to the inflation target of 2 percent.
The upcoming consumer price index, excluding food and energy, which will be released on Friday, will be interesting. The Fed relies heavily on it in its analysis of the US's underlying inflation.
Chris Larkin, investment chief at online brokerage Etrade, points out that many variables are still uncertain in the market.
The likely scenario in the short term is continued volatile trading, he says to Bloomberg.
