Asian auto stocks dropped on Thursday after US President Donald Trump announced a 25% tariff on imported vehicles, escalating a global trade dispute and drawing criticism and retaliation threats from US allies.
The new tariffs on cars and light trucks will take effect on April 3, a day after Trump plans to unveil reciprocal tariffs targeting countries responsible for the bulk of the US trade deficit. These levies add to existing duties on steel, aluminium, and goods from Mexico, Canada, and China.
In 2024, the US imported $474 billion worth of automotive products, including $220 billion in passenger cars. Major suppliers included Mexico, Japan, South Korea, Canada, and Germany, all of which have close ties to Washington.
European Commission President Ursula von der Leyen condemned the tariffs as “bad for businesses, worse for consumers,” while Canadian Prime Minister Mark Carney called them a “direct attack” on Canadian workers, warning of potential retaliatory measures.
“We will defend our workers, we will defend our companies, we will defend our country, and we will defend it together,” Carney said in Ottawa.
Japanese automakers Toyota Motor and Mazda Motor led stock declines in Tokyo, where the auto industry accounts for over a quarter of exports to the US. Shares of South Korean automakers Hyundai Motor and Kia Corp also fell sharply.
Japanese Prime Minister Shigeru Ishiba said Tokyo would consider “all options” in response to the new tariffs.
Brazil’s President Luiz Inacio Lula da Silva warned that Trump’s tariffs could harm the US economy.
“It will raise the prices of goods and could lead to inflation that he hasn’t yet realised,” Lula said at a press conference in Tokyo, adding that “protectionism doesn’t help any country in the world.” He pledged to challenge a US trade levy on Brazilian steel at the World Trade Organisation.
Trump views tariffs as a means to generate revenue to offset tax cuts and revive the declining US industrial sector. However, many trade analysts anticipate initial price increases and reduced demand, further straining a global auto industry already unsettled by Trump’s frequent tariff threats and policy shifts.
Faridah Abdulkadiri
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