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The financial markets were rocked this week by President Donald Trump's threats to impose a staggering 25% tariff on products imported from Canada and Mexico. This promise sent shockwaves through the automotive sector, causing a notable dip in various companies' stock prices, with Tesla experiencing the most significant drop among the so-called "Magnificent Seven"—the largest U.S. companies by market capitalization.
The automotive industry relies heavily on the intricate supply chains that traverse borders between Canada, Mexico, and the U.S. For instance, a single vehicle’s engine or transmission could cross these borders multiple times before culminating in a final product. As such, any tariffs targeting Canada and Mexico could severely disrupt operations for manufacturers like Tesla.