Asian markets took a significant hit on Thursday as automakers suffered heavy losses following President Donald Trump’s announcement of new tariffs on imported vehicles and parts. The move is part of his aggressive trade policies, raising fears of a potential recession.
Previously, investors had gained some optimism after hints that tariffs set for Trump’s “Liberation Day” on April 2 might be less severe than anticipated. However, the latest announcement dashed those hopes, heightening market uncertainty.
Trump signed an order imposing a 25% tariff on all cars not manufactured in the U.S., including foreign-made cars and light trucks, set to take effect on April 3, 2025. Additionally, key automobile parts will face tariffs within the month.
About half of the cars sold in the U.S. are domestic, but significant portions of imports come from Mexico, Canada, Japan, South Korea, and Germany. Japan’s government expressed strong disapproval, calling the tariffs “extremely regrettable,” while Canadian Prime Minister Mark Carney referred to them as a “direct attack” on Canadian workers.
Trump’s comments about potentially easing reciprocal measures for April 2 did little to ease tensions. The tariffs sent shockwaves through the Asian automotive sector, with Tokyo’s Toyota and Honda dropping more than 3%, and Seoul-listed Hyundai falling over 4%.
U.S.-listed automakers like General Motors, Ford, and Stellantis also saw sharp declines after hours. Market experts, including SPI Asset Management’s Stephen Innes, warned that full-scale tariffs could spark a “worst-case macro cocktail” of inflation, slow growth, and increased volatility.
The auto sector’s struggles compounded broader market concerns, with Japan’s Nikkei and South Korea’s KOSPI both dipping almost 1%. However, markets in Hong Kong and Shanghai managed modest gains.
Despite the downturn, some relief came from Trump’s comment that he might offer to reduce tariffs on China if Beijing approves the sale of TikTok, a platform caught in the crossfire of U.S.-China tensions over national security.
The market uncertainty was amplified by rising consumer concerns, with a report showing that U.S. consumer sentiment had dropped to its lowest point since 2021.
Key Figures:
- Tokyo – Nikkei 225: +0.9% at 37,674.03
- Hong Kong – Hang Seng Index: +0.6% at 23,624.74
- Shanghai – Composite: +0.2% at 3,374.63
- Euro/Dollar: $1.0766 (from $1.0757)
- Pound/Dollar: $1.2900 (from $1.2891)
- Dollar/Yen: 150.11 yen (from 150.54 yen)
- West Texas Intermediate: +0.1% at $69.72 per barrel
- Brent North Sea Crude: +0.1% at $73.85 per barrel
Markets in New York and London closed mixed, with Wall Street’s Dow down 0.3%, while London’s FTSE 100 gained 0.3%.
AFP Report
