AFP – A plunge in automakers hit Asia equities yesterday after United States (US) President Donald Trump announced painful tariffs on all imported vehicles and parts as he presses hardball trade policies many fear will spark a recession.
Indications that levies lined up for the president’s ‘Liberation Day’ on April 2 would be less severe than feared had given investors a little hope, and helped markets chalk up much needed gains.
However, the White House’s habit of alternating between tough talk and leniency has fanned uncertainty and the latest announcement did little to soothe nerves.
“What we’re going to be doing is a 25-per-cent tariff on all cars that are not made in the US,” Trump said as he signed an order in the Oval Office.
The move takes effect at 12.01am Eastern time (0400 GMT) on April 3 and affects foreign-made cars and light trucks.
Key automobile parts will also be hit within the month.
About half of the cars sold in the US are made within the country. Of the imported vehicles, about half come from Mexico and Canada, with Japan, South Korea and Germany also major suppliers.
Japan’s government called the tariffs “extremely regrettable”, while Canadian Prime Minister Mark Carney called it a “direct attack” on his country’s workers.
There was little comfort in Trump’s comments that reciprocal measures lined up for next week could be “very lenient”.
The auto news hammered carmakers in Asia.
In Tokyo, Toyota – the world’s top-selling carmaker – fell two per cent, Honda shed 2.5 per cent while Nissan was off 1.7 per cent. Mitsubishi gave up more than three per cent, while Mazda dived six per cent and Subaru five per cent.
Seoul-listed Hyundai gave up more than four per cent.
In Mumbai, India’s Tata Motors, which exports Jaguar Land Rovers to the US, lost more than five per cent.
US-listed car giants also tumbled with General Motors, Ford and Stellantis all deep in the red in after-hours trade.
“It’s a stark reminder: Trump’s not bluffing – or at least he’s doing a good job pretending he’s not,” said SPI Asset Management’s Stephen Innes.
“And if he goes full throttle with this round of tariffs – especially the reciprocal measures slated for April 2 – markets are staring down the barrel of the worst-case macro mix: faster inflation, slower growth and a fresh wave of volatility.”
The retreat in the auto sector hit broader markets, which were already shaky owing to worries over Trump’s trade agenda.
Tokyo, Sydney, Seoul, Wellington, Taipei, Bangkok and Manila all fell. However, Hong Kong and Shanghai eked out gains with Singapore and Mumbai.
Traders were given some cheer after Trump told reporters at the White House that he might offer to reduce tariffs on China to get Beijing’s approval for the sale of popular social media platform TikTok.
Trump said this month Washington was in talks with four groups interested in buying TikTok, which has been in limbo after a US law ordered it to divest from its owner ByteDance or be banned in the country owing to national security concerns.
The broadly negative day followed losses on all three of Wall Street’s main indexes ahead of the president’s announcement, with the CBOE Volatility Index – or “fear gauge” – jumping almost seven per cent.
Market jitters were compounded by data on Tuesday showing consumer sentiment had fallen to its lowest level since 2021 as concerns about higher prices increase.
