U.S. stock futures fell on Wednesday evening as investors reacted to President Donald Trump’s decision to impose 25% tariffs on foreign-made automobiles, effective April 2. The move sent ripples across the auto industry, triggering a broad market selloff.
At the same time, technology stocks with exposure to artificial intelligence (AI) faced fresh headwinds, as a TD Cowen report revealed that Microsoft (NASDAQ: MSFT) had canceled multiple AI data center leases in the U.S. and Europe. The news added to concerns of an oversupply in AI computing infrastructure and potential cooling demand for AI-related hardware.
By 8:20 PM ET (00:20 GMT), S&P 500 futures were down 0.2% to 5,746.50 points, while Nasdaq 100 futures slipped 0.3% to 20,053.50 points. Dow Jones futures dropped 0.1% to 42,687.0 points.
Trump’s Auto Tariffs Spark Industry Turmoil
The newly announced 25% tariff on all foreign cars and light trucks is expected to reshape the U.S. auto industry by pressuring manufacturers to shift production stateside. However, it also raises concerns over higher vehicle costs and supply chain disruptions.
Key Impacts of Trump’s Tariff Decision:
- US automakers face challenges: Companies like General Motors (NYSE: GM), Stellantis (BIT: STLAM), and Ford (NYSE: F) saw sharp declines between 4.5% and 7% in aftermarket trading. Despite their U.S. presence, these firms operate numerous production facilities in Mexico and other overseas locations.
- EV leader Tesla (NASDAQ: TSLA) also took a hit, falling 0.6% after an earlier 5.6% drop during regular trading hours.
- Foreign automakers listed in the U.S., including Toyota (NYSE: TM), Honda (NYSE: HMC), and Ferrari (NYSE: RACE), lost between 1.7% and 3% in extended trading.
Market analysts warn that Trump’s protectionist policies could stoke inflation, as tariffs often lead to higher prices for consumers. Additionally, the move may trigger retaliatory measures from key trading partners, further disrupting global trade dynamics.
AI Stocks Plunge as Microsoft Scales Back Expansion
Beyond tariffs, technology stocks faced renewed selling pressure amid worries that AI demand may be slowing. The TD Cowen report revealed Microsoft had canceled over 2 gigawatts (GW) of data center leases in recent months, fueling fears of a bubble in AI infrastructure investment.
The report follows a recent warning from Alibaba (NYSE: BABA) Chairman Joe Tsai, who suggested that excessive AI data center expansion could lead to oversupply issues. Adding to concerns, a Financial Times report indicated that China may impose stricter energy regulations that could further challenge chipmakers selling to the region.
Tech Stocks React to AI Concerns:
- Nvidia (NASDAQ: NVDA) dropped 1.2% in extended trading, after an earlier 5.7% decline on Wednesday.
- Chip and server manufacturers Broadcom (NASDAQ: AVGO), Dell Technologies (NYSE: DELL), and Super Micro Computer (NASDAQ: SMCI) also suffered steep losses.
The broader market mirrored these declines. On Wednesday, the S&P 500 lost 1.1% to close at 5,712.20, while the Nasdaq Composite tumbled 2% to 17,899.02. The Dow Jones Industrial Average slipped 0.3% to 42,454.79.
With investors increasingly wary of both trade risks and shifting AI infrastructure demand, market volatility is likely to remain elevated in the coming sessions.