President Trump’s vow to impose tariffs on steel and aluminum next week rattled financial markets Thursday.
Stocks, which had already been down for the day, slipped further after the White House announced the planned tariffs. The Standard & Poor’s 500-stock index fell 1.2 percent to 2,682 Thursday afternoon, after falling roughly 2 percent earlier in the day.
Shares of automakers such as Ford and General Motors, large consumers of steel and aluminum, fell sharply, as the tariffs would raise the cost of raw materials.
“Historically, the automakers have to absorb these costs,” said Colin Langan, an analyst at UBS who covers automakers. “Consumers don’t adjust their price expectations based on higher steel prices.”
Shares of industrial companies also dropped, led by exporters such as Boeing and United Technologies.
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On the other hand, some companies that sell industrial metals saw their stock prices rise, with shares of AK Steel up roughly 8 percent and U.S. Steel jumping more than 6 percent.
The prospect of a protectionist policy push forced investors Thursday to rethink whether that could derail a global economy that has been growing across the board over the last year.
In fact, until Mr. Trump’s comments on Thursday, the prevailing worry for investors seemed to be that economic growth — both in the United States and around the world — was so robust that the Federal Reserve might move quickly to raise interest rates in order to fend off inflation.
Those concerns led to a sharp sell-off in the stock market in early February, with the S.&P. at one point down more than 10 percent from its January peak.
Mr. Trump’s comments seemed to overshadow those concerns, at least for the moment. The yield on the 10-year Treasury note — which moves in the opposite direction of its price — dropped sharply Thursday as investors scurried to the safety of American government bonds. After flirting with 3 percent in recent weeks, the yield was hovering near 2.80 percent Thursday afternoon.
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