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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 afternoon U.S. trading)

By Chuck Mikolajczak

NEW YORK, March 27 (Reuters) - Global stocks dipped and

gold hit a record high on Thursday in the wake of the latest

tariffs from U.S. President Donald Trump's administration that

expanded the trade war to auto imports.

Trump late on Wednesday announced 25% tariffs on all

vehicles and foreign-made auto parts imported into the United

States, scheduled to take effect on April 3. This weighed on

Japan's Nikkei and South Korea's KOSPI.

Countries around the globe threatened retaliatory levies.

U.S. stocks oscillated between gains and losses while

automakers slumped, although electric vehicle makers Tesla

and Rivian rallied as all of their production

is located within the U.S..

General Motors ( GM ) tumbled more than 6%, while Ford

lost about 3%, reflecting concerns about the impact on their

supply chains. U.S.-listed shares of Stellantis ( STLA ) dipped

roughly 1%.

"The pendulum that seems to be swinging right now for

markets is initially having a knee-jerk reaction to the worst

possible kind of expression of whatever's announced, and then

slowly digesting the fact that it might not be as bad as feared

and it might not even be as announced because it's part of a

broader negotiation," said Eric Theoret, FX strategist at

Scotiabank in Toronto.

The Dow Jones Industrial Average fell 120.77 points,

or 0.28%, to 42,333.38, the S&P 500 fell 9.03 points, or

0.17%, to 5,702.48 and the Nasdaq Composite fell 41.37

points, or 0.23%, to 17,857.20.

European stocks closed lower, with weakness in shares of the

continent's top carmakers. Volkswagen was down 1.26%,

BMW off 2.55% and Mercedes-Benz was 2.69%

lower.

MSCI's gauge of stocks across the globe

fell 1.77 points, or 0.21%, to 844.15.

The pan-European STOXX 600 index fell 0.44% to

546.31, a two-week closing low.

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 was 1.19%

higher at $3,055.33 an ounce, after hitting a record $3,059.30.

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, dipped 0.35% to 104.27, with the

euro up 0.42% at $1.0797.

Versus the dollar, the Mexican peso weakened 0.98% to

20.324 while the Canadian dollar softened 0.29% to C$1.43

as both countries are expected to be heavily impacted by the

auto tariffs.

Trump has announced plans to impose reciprocal tariffs on

all countries on April 2.

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.

Other data showed the economy grew at a slightly more solid

pace in the fourth quarter than previously estimated.

The benchmark U.S. 10-year Treasury note yield

rose 2.5 basis points to 4.363%. While the yield on the

seven-year note was higher after a soft auction of

$44 billion of the paper.

U.S. crude settled 0.39% higher at $69.92 a barrel

and Brent settled at $74.03 per barrel, up 0.33% on the

day, as investors assessed the ramifications of the latest

escalation in the trade war.