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Auto stocks fall on latest Trump tariff shot

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Dollar up against Canadian dollar, Mexican peso

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Gold hits record high

(Updates to U.S. morning trade)

By Chuck Mikolajczak

NEW YORK, March 27 (Reuters) -

Global stocks dipped and gold hit a record high on Thursday

in the wake of U.S. President Donald Trump's latest tariffs that

expanded the trade war to auto imports.

Trump announced 25% tariffs on all vehicles and foreign-made

auto parts imported into the United States late on Wednesday,

scheduled to take effect on April 3. This weighed on Japan's

Nikkei and South Korea's KOSPI stock markets.

Countries around the globe

threatened

retaliatory tariffs.

U.S. stocks shook off initial declines and were roughly

unchanged while automakers slumped. General Motors ( GM )

tumbled about 8%, while Ford dropped more than 4%,

reflecting concerns about the impact on their supply chains.

U.S.-listed shares of Stellantis ( STLA ) fell about 3%.

"We believe that he's using (auto tariffs) as a trade

negotiation. The markets are jittery because nobody really knows

what's going to happen and what will come out in future,"

Nicolas Lin, chairman and interim CEO of Aether Holdings.

The Dow Jones Industrial Average rose 20.71 points,

or 0.05%, to 42,478.39, the S&P 500 climbed 6.42 points,

or 0.12%, to 5,718.66 and the Nasdaq Composite advanced

21.25 points, or 0.09%, to 17,920.27.

European stocks fell, with weakness in shares of Europe's

top carmakers such as Volkswagen down nearly 2%, while

BMW lost almost 3% and Mercedes-Benz slid

more than 4%.

MSCI's gauge of stocks across the globe

slipped 0.4 points, or 0.05%, to 845.48.

The pan-European STOXX 600 index was down 0.5%

after falling as much as 1.1% to a two-week low.

Euro zone bond yields dropped, with Germany's 2-year yield

hitting its lowest since March 5.

Tariffs and their effect on the global economy, as well as

their potential to delay Federal Reserve rate cuts, have weighed

on stocks in recent weeks, though they have shown signs of

stabilizing lately.

Reflecting investors' caution, spot gold rose

1.07% to $3,051.69 an ounce, after hitting a record $3,057.75.

Goldman Sachs raised its gold price forecast on

Wednesday to $3,300, citing stronger-than-expected

exchange-traded fund inflows and sustained central bank demand.

The dollar index, which measures the greenback

against a basket of currencies, fell 0.2% to 104.43, with the

euro up 0.24% at $1.0777.

The Mexican peso weakened 0.82% versus the dollar at

20.288 while the Canadian dollar weakened 0.39% versus

the greenback to C$1.43 per dollar as both countries are

expected to be heavily impacted by the tariffs.

On China, Trump said he may give Beijing some tariff

reductions to get a deal done to sell TikTok, which helped

Chinese shares outperform in Asian trading.

Trump has touted plans to impose reciprocal tariffs on all

countries on April 2, which he dubbed "Liberation Day."

U.S. data showed the labor market remains on solid footing,

although the impact of Trump's tariff policy and the aggressive

cutting of federal workers by billionaire Elon Musk's Department

of Government Efficiency has yet to show an outsized impact.

The benchmark U.S. 10-year note yield rose 3.3

basis points to 4.371%.

U.S. crude rose 0.3% to $69.86 a barrel and Brent

increased to $73.89 per barrel, up 0.14% on the day, as

investors assessed the ramifications of the latest escalation in

the trade war.