The S&P 500 closed lower Thursday as sentiment was hurt by the Trump administration’s announcement to impose tariffs on automobile imports just ahead of key inflation data.

At 4:00 p.m. ET (20:00 GMT), the Dow Jones Industrial Average fell 155 points, or 0.4%, the S&P 500 fell 0.4% and the NASDAQ Composite fell 0.5%.

Trump announces auto tariffs, car stocks slide 

Sentiment has been hit by U.S. President Donald Trump announcing he will impose 25% tariffs on all foreign-made cars and light trucks, effective April 2.

The move is expected to ramp up local automobile costs in the near-term, as manufacturers race to find new supply chains and shift more of their production into the U.S.

But the 25% tariff also heralds pain for U.S. automakers, given that a bulk of them operate factories outside the U.S., especially in Mexico. 

General Motors (NYSE:GM), Stellantis (NYSE:STLA) and Ford (NYSE:F) all traded lower, while U.S.-listed foreign automakers Toyota (NYSE:TM), Honda (NYSE:HMC) and Ferrari (NYSE:RACE) also fell. 

Trump’s auto tariff threat sparked renewed concerns over the economic impact of his tariff agenda, especially as he gears up to impose tariffs on several major U.S. trading partners, also on April 2, a date he has dubbed "liberation day". 

U.S. economic growth slows 

Worries that the trade duties will dent U.S. growth and potentially reignite inflation have weighed on U.S. equities in the first quarter of 2025.

Data released earlier Thursday showed that U.S. economic growth slowed in the fourth quarter, according to a final revision of government data that followed two earlier estimates.

Gross domestic product increased at an annualized rate of 2.4% during the period, compared to a rise of 3.1% in the July-September quarter, figures from the Commerce Department’s Bureau of Economic Analysis showed.

Economists had predicted that the number would remain unrevised at a prior estimate of 2.3%.

Lululemon to report, AMD falls on downgrade

On the earnings calendar, markets will keeping tabs on a quarterly report from athleisure wear company Lululemon Athletica (NASDAQ:LULU) after the closing bell.

Investors are tipped to pay particularly close attention to any comments executives from the group may give about the broader outlook for discretionary spending, with recent data indicating that shoppers are becoming more cautious due in part to possible economic headwinds from Trump’s tariffs.

Elsewhere, Winnebago (NYSE:WGO) stock rose over 8% after the manufacturer of motorhomes reported better-than-expected fiscal second-quarter revenue and a narrowed loss.

Robinhood Markets Inc (NASDAQ:HOOD) fell 1% after rolling out weather management and private banking services.

Advanced Micro Devices Inc (NASDAQ:AMD) fell 3% after Jefferies’ downgrade to hold from buy, citing competition concerns.

(Peter Nurse, Ambar Warrick contributed to this article.)